Supply chain dynamics with assortative matching

This article studies the evolutionarily stable equilibria of one-manufacturer and one-retailer supply chains. Each agent chooses to be either shareholder-oriented or stakeholder-oriented based on its own preference, then gives its pricing decision. Supply chains are formed by two types of matching processes: uniform random matching and assortative matching. Results indicate that, under uniform random matching, only one evolutionarily stable equilibrium exists, namely, the strict Nash equilibrium where both manufacturer and retailer choose shareholder strategy. Under assortative matching, the strict Nash equilibrium may not be evolutionarily stable under sign-compatible dynamics. The equilibrium where both manufacturer and retailer choose stakeholder strategy may be evolutionarily stable for certain values of the indices of assortativity. Furthermore, an interior equilibrium is observed with assortative matching, and the boundary equilibrium may be an evolutionarily stable equilibrium in some special cases.