This paper studies dynamic innovation and pricing decisions in a two-echelon supply chain. We model a distribution channel where a seller sells a product to an independent buyer who ultimately sells it to the customers. We refer to innovation as efforts made on the product quality improvement, or on process improvement. Both the players can put innovation efforts over time which in turn may enhance the goodwill of the product in market. The product demand increases with goodwill and decreases with the retail price. The innovation efforts can also impact the unit processing cost of the product at the upstream firm’s end positively or negatively. We model the problem as a Stackelberg differential game in which the seller first announces its wholesale price and innovation efforts over time and the buyer responds by deciding the retail price and its innovation efforts over time. We obtain feedback equilibrium strategies for a central decision maker in centralized channel, and for both the players in a decentralized channel. We also obtain several useful managerial insights using analytical as well as numerical means.

本文研究了两级供应链中的动态创新和价格决策。我们对分销渠道进行建模，在该渠道中，卖方将产品出售给独立的买方，而买方最终将其出售给客户。我们将创新称为改进产品质量或改进过程的努力。两家公司都可以随着时间的推移而不断创新，从而可以提高产品在市场上的信誉。产品需求随商誉的增加而增加，随零售价格的减少而减少。创新工作也可能对上游公司端的产品的单位加工成本产生正面或负面影响。我们将问题建模为Stackelberg差分游戏，其中卖方首先宣布其批发价格和一段时间内的创新努力，而买方则通过确定零售价格及其一段时间内的创新努力做出回应。我们获得集中式渠道中的中央决策者以及分散式渠道中的两个参与者的反馈均衡策略。我们还使用分析和数值方法获得了一些有用的管理见解。