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Contract choice game of supply chain competition at both manufacturer and retailer levels

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  • Li, Bai-Xun
  • Zhou, Yong-Wu
  • Li, Ji-zi
  • Zhou, Shi-ping

Abstract

This paper investigates the problem of contract choice game of two supply chains, which compete at both manufacturer and retailer levels. The two manufacturers, as Stackelberg leaders, produce competitive products and distribute through two common retailers or exclusive retailers, and can choose either wholesale price or quantity discount contracts. We present and compare the results of two different types of contracts under different scenarios, to explore in depth the effect of supply chain structure and competition at both manufacturer and retailer levels on the profits and contract choices of two supply chains. We find that under the setting of common retailers, when the competition at manufacturer level exceeds a certain value, the equilibrium contract of the manufacturers would shift from quantity discount to wholesale price. In contrast, in the case with exclusive retailers, the quantity discount contract is the dominant strategy and the unique Nash equilibrium of contract choice game regardless of the competitive intensity at both manufacturer and retailer levels.

Suggested Citation

  • Li, Bai-Xun & Zhou, Yong-Wu & Li, Ji-zi & Zhou, Shi-ping, 2013. "Contract choice game of supply chain competition at both manufacturer and retailer levels," International Journal of Production Economics, Elsevier, vol. 143(1), pages 188-197.
    • Handle: RePEc:eee:proeco:v:143:y:2013:i:1:p:188-197
    DOI: 10.1016/j.ijpe.2013.01.007
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    References listed on IDEAS

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    Cited by:

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    2. Li, Xiaojing & Chen, Jing & Ai, Xingzheng, 2019. "Contract design in a cross-sales supply chain with demand information asymmetry," European Journal of Operational Research, Elsevier, vol. 275(3), pages 939-956.
    3. Meng, Qingfeng & Li, Zhen & Liu, Huimin & Chen, Jingxian, 2017. "Agent-based simulation of competitive performance for supply chains based on combined contracts," International Journal of Production Economics, Elsevier, vol. 193(C), pages 663-676.
    4. Xiaojing Li & Xingzheng Ai, 2021. "A choice of selling format in the online marketplace with cross-sales supply chain: Platform selling or traditional reselling?," Electronic Commerce Research, Springer, vol. 21(2), pages 393-422, June.
    5. Nematollahi, Mohammadreza & Tajbakhsh, Alireza & Mosadegh Sedghy, Bahareh, 2021. "The reflection of competition and coordination on organic agribusiness supply chains," Transportation Research Part E: Logistics and Transportation Review, Elsevier, vol. 154(C).
    6. Yao-Yu Wang & Jiasen Sun & Jian-Cai Wang, 2016. "Equilibrium markup pricing strategies for the dominant retailers under supply chain to chain competition," International Journal of Production Research, Taylor & Francis Journals, vol. 54(7), pages 2075-2092, April.
    7. Izabela Nielsen & Sani Majumder & Eryk Szwarc & Subrata Saha, 2020. "Impact of Strategic Cooperation under Competition on Green Product Manufacturing," Sustainability, MDPI, vol. 12(24), pages 1-28, December.
    8. Xin Yun & Hao Liu & Yi Li & Kin Keung Lai, 2023. "Contract design under asymmetric demand information for sustainable supply chain practices," Annals of Operations Research, Springer, vol. 324(1), pages 1429-1459, May.
    9. Raghu Nandan Giri & Shyamal Kumar Mondal & Manoranjan Maiti, 2021. "Analysis of strategies for substitutable and complementary products in a two-levels fuzzy supply chain system," Operational Research, Springer, vol. 21(1), pages 485-524, March.
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    11. Yucai Wu & Jiguang Wang & Lu Chen, 2021. "Optimization and Decision of Supply Chain Considering Negative Spillover Effect and Service Competition," Sustainability, MDPI, vol. 13(4), pages 1-20, February.

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