Abstract: RFID technology can optimize the flow speed of deterioration item and reduce the losses of deterioration rate. Because the modern market is an open system and the cost of RFID technology is one of the major barriers, we need to study the feasibility of deterioration item manufacturers with different costs in open system adopting RFID technology. In this paper a competitive game pricing model as well as a cooperative game pricing model are established and compared between the deterioration item manufacturers with different costs before adopting RFID technology. Calculating the critical price can maintain high profit for existing manufacturers but has no attraction for new investors considering the number of deterioration products.We study the influence of RFID technology investment to deterioration item manufacturer profits and determine the cost of tag thresholds at which RFID technology investment becomes profitable based on the critical price. This can be used as quantitative and modeling basis by deterioration item manufacturers in making decision on RFID technology investment.A numerical simulation analysis is given to illustrate the model at last.

Key words: deterioration item, game price model, critical price, RFID tag cost