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A supply chain generalized network oligopoly model for pharmaceuticals under brand differentiation and perishability

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  • Masoumi, Amir H.
  • Yu, Min
  • Nagurney, Anna

Abstract

In this paper, we construct a generalized network oligopoly model with arc multipliers for supply chains of pharmaceutical products using variational inequality theory. The model captures the Cournot competition among the manufacturers who seek to determine their profit-maximizing product flows, which can be perishable, with the consumers differentiating among the products of the firms, whether branded or generic, and the firms taking into consideration the discarding costs. The numerical examples demonstrate that a brand pharmaceutical product may lose its dominant market share as a consequence of patent rights expiration and because of generic competition.

Suggested Citation

  • 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.
  • Handle: RePEc:eee:transe:v:48:y:2012:i:4:p:762-780
    DOI: 10.1016/j.tre.2012.01.001
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    References listed on IDEAS

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    1. Nagurney, Anna & Dupuis, Paul & Zhang, Ding, 1994. "A Dynamical Systems Approach for Network Oligopolies and Variational Inequalities," The Annals of Regional Science, Springer;Western Regional Science Association, vol. 28(3), pages 263-283, September.
    2. Anna Nagurney, 2010. "Formulation and analysis of horizontal mergers among oligopolistic firms with insights into the merger paradox: a supply chain network perspective," Computational Management Science, Springer, vol. 7(4), pages 377-406, October.
    3. 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.
    4. Liu, Zugang & Nagurney, Anna, 2011. "Supply chain outsourcing under exchange rate risk and competition," Omega, Elsevier, vol. 39(5), pages 539-549, October.
    5. Anna Nagurney & Min Yu & Qiang Qiang, 2011. "Supply chain network design for critical needs with outsourcing," Papers in Regional Science, Wiley Blackwell, vol. 90(1), pages 123-142, March.
    6. Goyal, S. K. & Giri, B. C., 2001. "Recent trends in modeling of deteriorating inventory," European Journal of Operational Research, Elsevier, vol. 134(1), pages 1-16, October.
    7. 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.
    8. Nagurney, Anna, 1989. "The formulation and solution of large-scale multicommodity equilibrium problems over space and time," European Journal of Operational Research, Elsevier, vol. 42(2), pages 166-177, September.
    9. Tsiakis, Panagiotis & Papageorgiou, Lazaros G., 2008. "Optimal production allocation and distribution supply chain networks," International Journal of Production Economics, Elsevier, vol. 111(2), pages 468-483, February.
    10. Steven N. Wiggins & Robert Maness, 2004. "Price Competition in Pharmaceuticals: The Case of Anti-infectives," Economic Inquiry, Western Economic Association International, vol. 42(2), pages 247-263, April.
    11. Dafermos, Stella & Nagurney, Anna, 1987. "Oligopolistic and competitive behavior of spatially separated markets," Regional Science and Urban Economics, Elsevier, vol. 17(2), pages 245-254.
    12. Sarang Deo & Charles J. Corbett, 2009. "Cournot Competition Under Yield Uncertainty: The Case of the U.S. Influenza Vaccine Market," Manufacturing & Service Operations Management, INFORMS, vol. 11(4), pages 563-576, July.
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    Cited by:

    1. repec:spr:jglopt:v:69:y:2017:i:1:d:10.1007_s10898-017-0497-x is not listed on IDEAS
    2. Wang, Xiaolei & Ouyang, Yanfeng & Yang, Hai & Bai, Yun, 2013. "Optimal biofuel supply chain design under consumption mandates with renewable identification numbers," Transportation Research Part B: Methodological, Elsevier, vol. 57(C), pages 158-171.
    3. repec:eee:transe:v:111:y:2018:i:c:p:186-209 is not listed on IDEAS
    4. repec:eee:soceps:v:60:y:2017:i:c:p:62-76 is not listed on IDEAS
    5. Yu, Yugang & Han, Xiaoya & Hu, Guiping, 2016. "Optimal production for manufacturers considering consumer environmental awareness and green subsidies," International Journal of Production Economics, Elsevier, vol. 182(C), pages 397-408.
    6. Li, Dong & Nagurney, Anna, 2015. "A general multitiered supply chain network model of quality competition with suppliers," International Journal of Production Economics, Elsevier, vol. 170(PA), pages 336-356.
    7. Chung, Sung Hoon & Kwon, Changhyun, 2016. "Integrated supply chain management for perishable products: Dynamics and oligopolistic competition perspectives with application to pharmaceuticals," International Journal of Production Economics, Elsevier, vol. 179(C), pages 117-129.
    8. Duijzer, Lotty Evertje & van Jaarsveld, Willem & Dekker, Rommert, 2018. "Literature review: The vaccine supply chain," European Journal of Operational Research, Elsevier, vol. 268(1), pages 174-192.
    9. 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.
    10. repec:eee:transe:v:103:y:2017:i:c:p:109-142 is not listed on IDEAS
    11. 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.
    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. 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.
    14. 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.

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