IDEAS home Printed from https://ideas.repec.org/a/ags/ifaamr/320215.html
   My bibliography  Save this article

Assessing the coordinated revenue-sharing contract of China’s farmer-supermarket direct-purchase model

Author

Listed:
  • Liang, Pen
  • Sima, Melat
  • Huang, Yu
  • Sun, Xiaoyu

Abstract

China began connecting farmers directly with supermarkets 10 years ago, when they were at a disadvantage and forced to sell products at low prices, as unstable cooperation among supply chain participants led to inequitable distribution of revenue. Revenue-sharing contracts offer a risk-sharing approach to ensure supply chain coordination and optimize profit for all. Research on short life cycle products with revenue-sharing contracts assume stable prices or investigate the effects of revenue-sharing contracts on supply chain coordination. This study introduced a revenue-sharing contract model into a ‘farmer-supermarket direct-purchase’ supply chain, considering price fluctuation and retail promotional efforts, stochastic market demand, among other factors. Revenue-sharing contracts achieved long-term stability in supply chain coordination, all participants obtained more profits, and the size of revenue-sharing parameter depends on the position and bargaining power of all participants. A case study on Tianhong supermarket and Nanxia farmer cooperative verified these findings, eliciting practical implications for professionals and policymakers.

Suggested Citation

  • Liang, Pen & Sima, Melat & Huang, Yu & Sun, Xiaoyu, 2022. "Assessing the coordinated revenue-sharing contract of China’s farmer-supermarket direct-purchase model," International Food and Agribusiness Management Review, International Food and Agribusiness Management Association, vol. 25(2), March.
    • Handle: RePEc:ags:ifaamr:320215
    DOI: 10.22004/ag.econ.320215
    as

    Download full text from publisher

    File URL: https://ageconsearch.umn.edu/record/320215/files/ifamr2020.0196.pdf
    Download Restriction: no
    File URL: https://libkey.io/10.22004/ag.econ.320215?utm_source=ideas
    LibKey link: if access is restricted and if your library uses this service, LibKey will redirect you to where you can use your library subscription to access this item
    ---><---

    References listed on IDEAS

    as
    1. Mighell, Ronald L. & Jones, Lawrence A., 1963. "Vertical Coordination in Agriculture," Agricultural Economic Reports 307164, United States Department of Agriculture, Economic Research Service.
    2. Abel P. Jeuland & Steven M. Shugan, 1983. "Managing Channel Profits," Marketing Science, INFORMS, vol. 2(3), pages 239-272.
    3. Hildegunn E. Stokke, 2009. "Multinational supermarket chains in developing countries: does local agriculture benefit?," Agricultural Economics, International Association of Agricultural Economists, vol. 40(6), pages 645-656, November.
    4. Jill E. Hobbs & Linda M. Young, 1999. "Increasing Vertical Linkages in Agrifood Supply Chains: A Conceptual Model and Some Preliminary Evidence," Canadian Journal of Agricultural Economics/Revue canadienne d'agroeconomie, Canadian Agricultural Economics Society/Societe canadienne d'agroeconomie, vol. 47(4), pages 478-478, December.
    5. Weiqin Tang & Weimin Tang & Changsheng Jiang & Shan Lu, 2014. "Incentive Decision on Safety Investment of Supply Chain of Agricultural Products in “Agricultural Super-Docking”," Journal of Applied Mathematics, Hindawi, vol. 2014, pages 1-8, October.
    6. Yunzeng Wang & Li Jiang & Zuo-Jun Shen, 2004. "Channel Performance Under Consignment Contract with Revenue Sharing," Management Science, INFORMS, vol. 50(1), pages 34-47, January.
    7. Gérard P. Cachon & Martin A. Lariviere, 2005. "Supply Chain Coordination with Revenue-Sharing Contracts: Strengths and Limitations," Management Science, INFORMS, vol. 51(1), pages 30-44, January.
    Full references (including those not matched with items on IDEAS)

    Citations

    Citations are extracted by the CitEc Project, subscribe to its RSS feed for this item.
    as


    Cited by:

    1. Tianle Tian & Chuiyong Zheng & Liguo Yang & Xiaochun Luo & Lin Lu, 2022. "Optimal Recycling Channel Selection of Power Battery Closed-Loop Supply Chain Considering Corporate Social Responsibility in China," Sustainability, MDPI, vol. 14(24), pages 1-30, December.

    Most related items

    These are the items that most often cite the same works as this one and are cited by the same works as this one.
    1. Yao, Z. & Leung, Stephen C.H. & Lai, K.K., 2008. "Manufacturer's revenue-sharing contract and retail competition," European Journal of Operational Research, Elsevier, vol. 186(2), pages 637-651, April.
    2. Yun Fong Lim & Yunzeng Wang & Yue Wu, 2015. "Consignment Contracts with Revenue Sharing for a Capacitated Retailer and Multiple Manufacturers," Manufacturing & Service Operations Management, INFORMS, vol. 17(4), pages 527-537, October.
    3. Hsieh, Chung-Chi & Wu, Cheng-Han, 2009. "Coordinated decisions for substitutable products in a common retailer supply chain," European Journal of Operational Research, Elsevier, vol. 196(1), pages 273-288, July.
    4. Bender, Mark & Gal-Or, Esther & Geylani, Tansev, 2021. "Attracting artists to music streaming platforms," European Journal of Operational Research, Elsevier, vol. 290(3), pages 1083-1097.
    5. Hou, Xiyang & Li, Jianbin & Liu, Zhixin & Guo, Yongjiang, 2022. "Pareto and Kaldor–Hicks improvements with revenue-sharing and wholesale-price contracts under manufacturer rebate policy," European Journal of Operational Research, Elsevier, vol. 298(1), pages 152-168.
    6. Chen, Xiangfeng, 2015. "A model of trade credit in a capital-constrained distribution channel," International Journal of Production Economics, Elsevier, vol. 159(C), pages 347-357.
    7. Hsieh, Chung-Chi & Wu, Cheng-Han, 2008. "Capacity allocation, ordering, and pricing decisions in a supply chain with demand and supply uncertainties," European Journal of Operational Research, Elsevier, vol. 184(2), pages 667-684, January.
    8. Chakraborty, Tulika & Chauhan, Satyaveer S. & Vidyarthi, Navneet, 2015. "Coordination and competition in a common retailer channel: Wholesale price versus revenue-sharing mechanisms," International Journal of Production Economics, Elsevier, vol. 166(C), pages 103-118.
    9. Liu, Yong & Fry, Michael J. & Raturi, Amitabh S., 2009. "Retail price markup commitment in decentralized supply chains," European Journal of Operational Research, Elsevier, vol. 192(1), pages 277-292, January.
    10. Pietro De Giovanni, 2016. "Coordination in a distribution channel with decisions on the nature of incentives and share-dependency on pricing," Journal of the Operational Research Society, Palgrave Macmillan;The OR Society, vol. 67(8), pages 1034-1049, August.
    11. van der Rhee, Bo & Schmidt, Glen & A. van der Veen, Jack A. & Venugopal, V., 2014. "Revenue-sharing contracts across an extended supply chain," Business Horizons, Elsevier, vol. 57(4), pages 473-482.
    12. Pyung-Hoi Koo, 2022. "A Capacity Cost-Sharing Contract for a Two-Stage Supply Chain with a Risk-Averse Supplier under a Bargaining Power," Sustainability, MDPI, vol. 14(4), pages 1-17, February.
    13. Jen-Ming Chen & Hung-Liang Cheng, 2012. "Effect of the price-dependent revenue-sharing mechanism in a decentralized supply chain," Central European Journal of Operations Research, Springer;Slovak Society for Operations Research;Hungarian Operational Research Society;Czech Society for Operations Research;Österr. Gesellschaft für Operations Research (ÖGOR);Slovenian Society Informatika - Section for Operational Research;Croatian Operational Research Society, vol. 20(2), pages 299-317, June.
    14. Kunter, Marcus, 2012. "Coordination via cost and revenue sharing in manufacturer–retailer channels," European Journal of Operational Research, Elsevier, vol. 216(2), pages 477-486.
    15. Álvarez-Albelo, Carmen D. & Hernández-Martín, Raúl & Padrón-Fumero, Noemi, 2017. "Air passenger duties as strategic tourism taxation," Tourism Management, Elsevier, vol. 60(C), pages 442-453.
    16. Chakravarty, Amiya K. & Werner, Adrian S., 2011. "Telecom service provider portal: Revenue sharing and outsourcing," European Journal of Operational Research, Elsevier, vol. 215(1), pages 289-300, November.
    17. Wang, Feng & Diabat, Ali & Wu, Lunwen, 2021. "Supply chain coordination with competing suppliers under price-sensitive stochastic demand," International Journal of Production Economics, Elsevier, vol. 234(C).
    18. à lvarez-Albelo, Carmen D. & Hernández-Martín, Raúl & Padrón-Fumero, Noemi, 2020. "The effects on tourism of airfare subsidies for residents: The key role of packaging strategies," Journal of Air Transport Management, Elsevier, vol. 84(C).
    19. Fang, Xiang & Gavirneni, Srinagesh & Rao, Vithala R., 2013. "Supply chains in the presence of store brands," European Journal of Operational Research, Elsevier, vol. 224(2), pages 392-403.
    20. Zhisong Chen & Li Fang & Shong-Iee Ivan Su, 2021. "The value of offline channel subsidy in bricks and clicks: an O2O supply chain coordination perspective," Electronic Commerce Research, Springer, vol. 21(2), pages 599-643, June.

    More about this item

    Keywords

    Demand and Price Analysis; Marketing;

    Statistics

    Access and download statistics

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:ags:ifaamr:320215. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a bibliographic reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: AgEcon Search (email available below). General contact details of provider: https://edirc.repec.org/data/ifamaea.html .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.