It is in principle possible to envision self-control as a coping strategy to curb the excesses of self-indulgence, and self-indulgence as a healthy reaction to the dysfunctional inhibitions of self-control, so that the two tendencies need to be dynamically balanced (Gómez-Miñambres and Schniter, 2017), and this is one possible reason why they might complement rather than antagonize each other. For instance, one could observe that the widely documented self-indulgence drive in consumption choices in the past few decades has been accompanied by a growing social emphasis on sophisticated strategies of self-control of impulses and bad habits (Quinn et al, 2010 Mandel et al., 2017) and of self-modification (Watson and Tharp, 2014), culminating in the diffusion in policy practice of non-coercive but clearly control-focused approaches to the architecture of choice such as nudging (Hertwig and Grüne-Yanoff, 2017), and even in explicitly self-control centered approaches to compulsive buying (Horváth et al., 2015). To understand the interplay of these two dimensions is an interesting challenge for future research. Furthermore, we show that, keeping the prices at the level of no gift cards is the dominant strategy for the supply chain and consumers, and the difference between retail prices and wholesale prices of two products is the key factor in determining the gift card value. In the strategy of changed wholesale and retail prices, the retailer and two manufacturers have an incentive to raise the retail and wholesale prices under certain conditions. In the strategy of unchanged wholesale prices and changed retail prices, if the gift card value is not very large, the retailer’s profit margins and average consumer surplus from the gift card promotion are increasing in the gift card value. We find that the two manufacturers benefit more from the gift card promotion than the retailer does. The gift card promotions can effectively stimulate the demands of two products. The results indicate that, in the strategy of unchanged wholesale and retail prices, the retailer and two manufacturers are better off. We analyze three cases with different gift card strategies based on whether the wholesale and retail prices are changed or unchanged. We develop a model of free gift card promotions in a two-product supply chain.
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