Optimal Supply of Manufacturer under Electronic Secondary Market

The advance of business-to-business commerce has result in the establishment of many types of electronic marketplace. This paper focuses on a market exchange as the "secondary market" for the perishable goods-that is, for the resellers to disposal and acquisition of excess perishable goods inventory. Follow the method of Lee and Whang(2002), we develop a model of secondary market in the case of given supply price P₁ to clear the market. In this model, one manufacturer and n resellers compose a two-stage supply chain for perishable goods. The sale season is divided into two periods. At the beginning of first period, resellers order directly from the manufacturer, and at the beginning of second period, electronic secondary market opens, resellers can trade inventory among themselves in it. We endogenously derive the optimal decisions for the resellers, along with the equilibrium market price of the secondary market and supply price. And based on the analysis of resellers\´ decisions, we deduce the optimal supply for the maximization of manufacturer\´s profit.