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Price and cold-chain service decisions versus integration in a fresh agri-product supply chain with competing retailers

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  • Yunlong Yu

    (Nanjing University
    Changzhou University)

  • Tiaojun Xiao

    (Nanjing University)

  • Zhangwei Feng

    (Nanjing University)

Abstract

This paper studies the price and cold-chain service decisions of a fresh agri-product supply chain with competing retailers and explores the impacts of (horizontal/vertical) integration on the decisions and profits. When the cold-chain service price is exogenous, we find that vertical integration is more effective to decrease quantity/quality loss of agri-products; the third-party logistics provider is better off with vertical integration while horizontal integration hurts both the third-party logistics provider and the supplier. We identify the conditions under which a retailer benefits from vertical or horizontal integration. Whether horizontal integration can improve the retailer’s profit depends on product substitutability. The profit of a retailer can be enhanced by vertical integration between the other retailer and the supplier if product substitutability is low. The endogenization of the cold-chain service price does not change the main results qualitatively.

Suggested Citation

  • Yunlong Yu & Tiaojun Xiao & Zhangwei Feng, 2020. "Price and cold-chain service decisions versus integration in a fresh agri-product supply chain with competing retailers," Annals of Operations Research, Springer, vol. 287(1), pages 465-493, April.
    • Handle: RePEc:spr:annopr:v:287:y:2020:i:1:d:10.1007_s10479-019-03368-y
    DOI: 10.1007/s10479-019-03368-y
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