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Logistic'S Chain Cooperative Structure - Pre-Condition For Elimination Of Double Marginal Effect

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  • Drago Pupavac

Abstract

Logistic chains represent the connection between merchandise and cash flows and information and all participants (production, transport, sales, banking, insurance, customs, ...) activity and phases (suppliers, producers, distributors, retailers, buyers) that are directly or indirectly connected in the process of satisfying the needs of final consumer. Synergetic effects within the logistic chain can be fulfilled once all the participants become aware of the fact that their actions affect other participants and the logistic chain itself. Lack of synergetic effects represents lack of cooperation, i.e. conflicted goals of different participants who are trying to maximise their own profit at the expense of entire logistic chain. Whenever the logistics' chain profit is divided among two or more participants, marginal effect becomes predominant, which results in lower total profit. In order to eliminate this effect it is necessary to develop cooperative vs. competitive structure within logistic chain.

Suggested Citation

  • Drago Pupavac, 2010. "Logistic'S Chain Cooperative Structure - Pre-Condition For Elimination Of Double Marginal Effect," Montenegrin Journal of Economics, Economic Laboratory for Transition Research (ELIT), vol. 6(12), pages 53-59.
  • Handle: RePEc:mje:mjejnl:v:6:y:2010:i:12:p:53-59
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