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Game theoretic analysis of horizontal carrier coordination with revenue sharing in E-commerce logistics

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  • Mengdi Zhang
  • Yufang Fu
  • Zhiheng Zhao
  • Saurabh Pratap
  • George Q. Huang

Abstract

This paper proposes comparisons among two different competitive power structures with and without horizontal coordination. We conduct a game theoretic analysis on the situation where two logistics service providers compete in an e-commerce logistics market with respect to the order quantity and service level decision on a particular logistics service product. Under a consumer utility-based demand, we acquire the equilibrium order quantity decisions and optimal profits under the centralised setting and decentralised setting. An analytical model is established to examine the existence of the Nash equilibrium in the service game. We then prove that the logistics service demand depends on different competitive power structures with the establishment of Cournot game and Stackelberg game model. The analytical results and the equilibrium analysis of the e-commerce logistics system are investigated. After that, we compare the equilibrium results among the centralised system, Cournot game, and Stackelberg game. To empower the horizontal carrier coordination, we design a revenue sharing contract for the decentralised model. A numerical study illustrates the impact of parameters on the optimal decision variables. In this paper, we prove the effectiveness of horizontal carrier collaboration and explicate the reason for the lower marginal profit in logistics theoretically.

Suggested Citation

  • Mengdi Zhang & Yufang Fu & Zhiheng Zhao & Saurabh Pratap & George Q. Huang, 2019. "Game theoretic analysis of horizontal carrier coordination with revenue sharing in E-commerce logistics," International Journal of Production Research, Taylor & Francis Journals, vol. 57(5), pages 1524-1551, March.
    • Handle: RePEc:taf:tprsxx:v:57:y:2019:i:5:p:1524-1551
    DOI: 10.1080/00207543.2018.1492754
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    Cited by:

    1. Yuyan Wang & Zhaoqing Yu & Liang Shen & Runjie Fan & Rongyun Tang, 2021. "Decisions and Coordination in E-Commerce Supply Chain under Logistics Outsourcing and Altruistic Preferences," Mathematics, MDPI, vol. 9(3), pages 1-23, January.
    2. Sahani Rathnasiri & Pritee Ray & Carlos A. Vega-Mejía & Sardar M. N. Islam & Nripendra P. Rana & Yogesh K. Dwivedi, 2022. "Optimising small-scale electronic commerce supply chain operations: a dynamic cost-sharing contract approach," Annals of Operations Research, Springer, vol. 318(1), pages 453-499, November.
    3. Li, Guo & Wu, Huamin & Sethi, Suresh P. & Zhang, Xiang, 2021. "Contracting green product supply chains considering marketing efforts in the circular economy era," International Journal of Production Economics, Elsevier, vol. 234(C).
    4. Dhirendra Prajapati & Arjun R Harish & Yash Daultani & Harpreet Singh & Saurabh Pratap, 2023. "A Clustering Based Routing Heuristic for Last-Mile Logistics in Fresh Food E-Commerce," Global Business Review, International Management Institute, vol. 24(1), pages 7-20, February.
    5. Yongtao Peng & Bohai Chen & Eleonora Veglianti, 2022. "Platform Service Supply Chain Network Equilibrium Model with Data Empowerment," Sustainability, MDPI, vol. 14(9), pages 1-21, April.
    6. Mehmet Onur Olgun, 2022. "Collaborative airline revenue sharing game with grey demand data," Central European Journal of Operations Research, Springer;Slovak Society for Operations Research;Hungarian Operational Research Society;Czech Society for Operations Research;Österr. Gesellschaft für Operations Research (ÖGOR);Slovenian Society Informatika - Section for Operational Research;Croatian Operational Research Society, vol. 30(3), pages 861-882, September.
    7. Katsaliaki, Korina & Kumar, Sameer & Loulos, Vasilis, 2024. "Supply chain coopetition: A review of structures, mechanisms and dynamics," International Journal of Production Economics, Elsevier, vol. 267(C).
    8. Yaoguang Zhong & Fangfang Guo & Zhiqiang Wang & Huajun Tang, 2019. "Coordination Analysis of Revenue Sharing in E-Commerce Logistics Service Supply Chain With Cooperative Distribution," SAGE Open, , vol. 9(3), pages 21582440198, August.
    9. Liyuan Zhu & Nan Liu, 2023. "Game theoretic analysis of logistics service coordination in a live-streaming e-commerce system," Electronic Commerce Research, Springer, vol. 23(2), pages 1049-1087, June.
    10. Thyago Celso Cavalcante Nepomuceno & Késsia Thais Cavalcanti Nepomuceno & Thiago Poleto & Victor Diogho Heuer de Carvalho & Ana Paula Cabral Seixas Costa, 2022. "When Penalty Fails: Modeling Contractual Misincentives With Evidence From Portugal ITO Agreements," SAGE Open, , vol. 12(4), pages 21582440221, December.
    11. Zheng, Wei & Li, Bo & Song, Dongping, 2022. "The optimal green strategies for competitive ocean carriers under potential regulation," European Journal of Operational Research, Elsevier, vol. 303(2), pages 840-856.
    12. Zhang, Xuefeng & Zhang, Yutan & Li, Guo, 2024. "Strategic inventory in semi-conductor supply chains under industrial disruption," International Journal of Production Economics, Elsevier, vol. 272(C).
    13. Xu, Yuqiu & Wang, Jia & Cao, Kaiying, 2023. "Logistics mode strategy of firms selling fresh products on e-commerce platforms with private brand introduction," Journal of Retailing and Consumer Services, Elsevier, vol. 73(C).
    14. Margaretha Gansterer & Richard F. Hartl & Sarah Wieser, 2021. "Assignment constraints in shared transportation services," Annals of Operations Research, Springer, vol. 305(1), pages 513-539, October.
    15. Mashalah, Heider Al & Hassini, Elkafi & Gunasekaran, Angappa & Bhatt (Mishra), Deepa, 2022. "The impact of digital transformation on supply chains through e-commerce: Literature review and a conceptual framework," Transportation Research Part E: Logistics and Transportation Review, Elsevier, vol. 165(C).

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