Price and warranty period decisions for complementary products with horizontal firms' cooperation/noncooperation strategies

•Price and warranty of complementary products are considered in this paper.•Two cooperative and three noncooperative decision models are given.•Different pricing actions between the two manufacturers are considered.•The corresponding closed-form expressions for equilibrium decisions are obtained.•Some interesting and valuable managerial insights are established.

The purpose of this paper is to explore the optimal strategies on price and warranty period of two complementary products in a supply chain with two manufacturers and one common retailer from a two-stage game theoretic perspective. Five decentralized models are established by considering the two manufacturers' cooperation/noncooperation strategies and the firms' different bargain powers. The corresponding closed-form expressions for equilibrium decisions are obtained. Through a systematic analysis and comparison, some interesting and valuable managerial insights are established. We find that, the retailer always has the advantage to get the higher profit when she is a leader; however, this is not always valid for two manufacturers, for example, two manufacturers' profits when they are leaders and they adopt the noncooperation strategy in the supply chain are lower than that when two manufacturers and the retailer have the identical market power. All channel members as well as consumers benefit from lower retail prices, longer warranty periods and larger profits when the two manufacturers' adopt cooperation action.