Marginal Cost 7 Wholesale Price Optimal retail Price

Wholesale Price 30 7 28.5

Retail Price 40.0 10 30
Demand 20 15 32.5
Retailer Profit 200 20 35
Supplier Profit 460 25 37.5
Supply Chain Profit 660 30 40
35 42.5
40 45
45 47.5

Optimal retail Price

50

45

40
f(x) = 0.5 x + 25
35

30

25

20

15

10

0
5 10 15 20 25 30 35 40
ptimal retail Price
This equation is the best-response function of the retailer

mal retail Price

30 35 40 45 50