Wei  Zhang  Ph.D.
Assistant Professor

Innovation and Information Management
Faculty of Business and Economics
The University of Hong Kong
Room 814, K.K. Leung Building
Pok Fu Lam Road, Hong Kong

wzhang15@hku.hk

张帷  博士
香港大学经济及工商管理学院
助理教授
薄扶林道,梁銶琚楼,814室


Research Highlight: 
Higher Prices for Larger Quantities? Non-Monotonic Price-Quantity Relations in B2B Markets

We study a microprocessor company selling short-life-cycle products to a set of buyers that includes large consumer electronic goods manufacturers. The seller has a limited capacity for each product and negotiates with each buyer for the price. Our analysis of their sales data reveals that larger purchases do not always result in bigger discounts. Instead, the discount curve is like an "N". While existing theories cannot explain this non-monotonic pattern, we develop an analytical model and show that the non-monotonicity is rooted in how the seller values capacity when negotiating with a buyer. Large buyers accelerate the selling process and small buyers are helpful in consuming the residual capacity. However, satisfying mid-sized buyers may be costly because supplying these buyers can make it difficult to utilize the remaining capacity, which is often too much for small buyers but not enough for large buyers. Our findings have implications for capacity rationing and posted pricing and the logic applies to many other industries.

Research Interests:
  • Product/Technology Adoption in Supply Chains
  • Supply Chain Negotiations & Contracts
  • Pricing and Revenue Management
  • Data-Driven Operations Management
Publications:
  • Contracts for changing times: Sourcing with Raw Material Price Volatility and Information Asymmetry. M&SOM, 2014.
  • Higher Prices for Larger Quantities? Non-Monotonic Price-Quantity Relations in B2B Markets. Management Science, 2016.
Teaching:
  • Decision and Risk Analysis