How significant is a complementary good to a company in the electronics industry?

Topic 

How significant is a complementary good to a company in the electronics industry?

Instructions 

Write a paper on how significant is a complementary good to a company in the electronics industry?

Answer Preview 

Complementary products allow firms in the electronic industry to determine optimal pricing, particularly in uncertain environments.  Wang, Zhao & Wei (2014) investigated the pricing decision-making for Chinese manufacturers of complementary electronic products, using Stackelberg game and Nash game models. The researchers developed a centralized pricing model to determine the pricing decision, but concluded that pricing strategy should be based on the decision-scenarios. Consistently, Giri et al. (2016) investigated the competition of sealing complementary product alongside substitutable products. Using four pricing decision models, the researchers concluded that the prices of complementary products provide a negative impact on the demand for other products. However, the observations were based on theoretical frameworks and assumptions drawn from the models, implying that there is no empirical finding to determine the optimal pricing strategy for complementary products in the industry. In high-technology segments, studies suggest that firms adopt differential pricing strategies and ensure a variety of products to keep the firms in the competitive market (Giri et al., 2016).

Word Count: 1300