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Supply chain network design under profit maximization and oligopolistic competition

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  • Nagurney, Anna

Abstract

In this paper, we model the supply chain network design problem with oligopolistic firms who are involved in the competitive production, storage, and distribution of a homogeneous product to multiple demand markets. The profit-maximizing firms select both the capacities associated with the various supply chain network activities as well as the product quantities. We formulate the governing Nash-Cournot equilibrium conditions as a variational inequality problem and identify several special cases of the model, notably, a generalization of a spatial oligopoly and a classical oligopoly problem to include design capacity variables. The proposed computational approach, which is based on projected dynamical systems, fully exploits the network structure of the problems and yields closed form solutions at each iteration. In order to illustrate the modeling framework and the algorithm, we also provide solutions to a spectrum of numerical supply chain network oligopoly design examples. This paper makes a contribution to game theoretic modeling of competitive supply chain network design problems in an oligopolistic setting.

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  • Nagurney, Anna, 2010. "Supply chain network design under profit maximization and oligopolistic competition," Transportation Research Part E: Logistics and Transportation Review, Elsevier, vol. 46(3), pages 281-294, May.
  • Handle: RePEc:eee:transe:v:46:y:2010:i:3:p:281-294
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    Cited by:

    1. Matei, Ion & Gueye, Assane & Baras, John S., 2015. "Flow control in time-varying, random supply chains," Transportation Research Part E: Logistics and Transportation Review, Elsevier, vol. 77(C), pages 311-330.
    2. Fattahi, Mohammad & Mahootchi, Masoud & Govindan, Kannan & Moattar Husseini, Seyed Mohammad, 2015. "Dynamic supply chain network design with capacity planning and multi-period pricing," Transportation Research Part E: Logistics and Transportation Review, Elsevier, vol. 81(C), pages 169-202.
    3. Hafezalkotob, Ashkan, 2017. "Competition, cooperation, and coopetition of green supply chains under regulations on energy saving levels," Transportation Research Part E: Logistics and Transportation Review, Elsevier, vol. 97(C), pages 228-250.
    4. Chung, Sung H. & Weaver, Robert D. & Friesz, Terry L., 2013. "Strategic response to pollution taxes in supply chain networks: Dynamic, spatial, and organizational dimensions," European Journal of Operational Research, Elsevier, vol. 231(2), pages 314-327.
    5. Possamai, Janaína Poffo & Pescador, Andresa & Mayerle, Sérgio Fernando & Neiva de Figueiredo, João, 2015. "Optimal commodity price stabilization as a multi-period spatial equilibrium problem: A supernetwork approach with public buffer stocks," Transportation Research Part E: Logistics and Transportation Review, Elsevier, vol. 77(C), pages 289-310.
    6. Liedtke, Gernot & Carrillo Murillo, David Guillermo, 2012. "Assessment of policy strategies to develop intermodal services: The case of inland terminals in Germany," Transport Policy, Elsevier, vol. 24(C), pages 168-178.
    7. Huang, Yongxi & Chen, Yihsu, 2014. "Analysis of an imperfectly competitive cellulosic biofuel supply chain," Transportation Research Part E: Logistics and Transportation Review, Elsevier, vol. 72(C), pages 1-14.
    8. Gernot Liedtke & Hanno Friedrich, 2012. "Generation of logistics networks in freight transportation models," Transportation, Springer, vol. 39(6), pages 1335-1351, November.
    9. Grigoroudis, Evangelos & Petridis, Konstantinos & Arabatzis, Garyfallos, 2014. "RDEA: A recursive DEA based algorithm for the optimal design of biomass supply chain networks," Renewable Energy, Elsevier, vol. 71(C), pages 113-122.
    10. Nagurney, Anna & Yu, Min & Floden, Jonas & Nagurney, Ladimer S., 2014. "Supply chain network competition in time-sensitive markets," Transportation Research Part E: Logistics and Transportation Review, Elsevier, vol. 70(C), pages 112-127.
    11. repec:eee:soceps:v:60:y:2017:i:c:p:62-76 is not listed on IDEAS
    12. Yu, Min & Nagurney, Anna, 2013. "Competitive food supply chain networks with application to fresh produce," European Journal of Operational Research, Elsevier, vol. 224(2), pages 273-282.
    13. Anna Nagurney & Min Yu & Jonas Floden, 2013. "Supply chain network sustainability under competition and frequencies of activities from production to distribution," Computational Management Science, Springer, vol. 10(4), pages 397-422, December.
    14. Nagurney, Anna & Yu, Min, 2012. "Sustainable fashion supply chain management under oligopolistic competition and brand differentiation," International Journal of Production Economics, Elsevier, vol. 135(2), pages 532-540.
    15. Nagurney, Anna & Li, Dong & Nagurney, Ladimer S., 2014. "Spatial price equilibrium with information asymmetry in quality and minimum quality standards," International Journal of Production Economics, Elsevier, vol. 158(C), pages 300-313.
    16. Anna Nagurney & Dong Li & Tilman Wolf & Sara Saberi, 2013. "A network economic game theory model of a service-oriented internet with choices and quality competition," Netnomics, Springer, vol. 14(1), pages 1-25, November.
    17. Anna Nagurney & Dong Li, 2014. "A Dynamic Network Oligopoly Model with Transportation Costs, Product Differentiation, and Quality Competition," Computational Economics, Springer;Society for Computational Economics, vol. 44(2), pages 201-229, August.
    18. Masoumi, Amir H. & Yu, Min & Nagurney, Anna, 2012. "A supply chain generalized network oligopoly model for pharmaceuticals under brand differentiation and perishability," Transportation Research Part E: Logistics and Transportation Review, Elsevier, vol. 48(4), pages 762-780.

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