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Supply Chain Coordination Under Competition

Authors: Guillermo Gallego; Masoud Talebian;

Supply Chain Coordination Under Competition

Abstract

We study contracts between suppliers with fixed capacities of substitutable products and a single retailer. Suppliers present the retailer with contracts, and the retailer decides how much capacity to buy from each supplier and the quantity to sell in the market. We are interested in the form of the contracts in equilibrium, their effect on supply chain profit, and how profits are split between the suppliers and the retailer. Under mild assumptions on the supply chain profit as a function of sales, we show that in equilibrium suppliers use non-linear (sophisticated) contracts. Additionally, we characterize the set of equilibrium contracts, and show that all equilibria result in a coordinated chain with a unique profit split. The profit of each supplier is equal to the marginal contribution of her capacity to supply chain profits. Sophisticated contracts may harm some suppliers relative to the equilibrium profits resulting from wholesale price contracts.

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selected citations
These citations are derived from selected sources.
This is an alternative to the "Influence" indicator, which also reflects the overall/total impact of an article in the research community at large, based on the underlying citation network (diachronically).
BIP!Citations provided by BIP!
popularity
This indicator reflects the "current" impact/attention (the "hype") of an article in the research community at large, based on the underlying citation network.
BIP!Popularity provided by BIP!
influence
This indicator reflects the overall/total impact of an article in the research community at large, based on the underlying citation network (diachronically).
BIP!Influence provided by BIP!
impulse
This indicator reflects the initial momentum of an article directly after its publication, based on the underlying citation network.
BIP!Impulse provided by BIP!
0
Average
Average
Average
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