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The Complexity Analysis for Price Game Model of Risk-Averse Supply Chain Considering Fairness Concern

Author

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  • Huang Yi-min
  • Li Qiu-xiang
  • Zhang Yu-hao

Abstract

This paper, considering risk aversion and fair concern, establishes a dynamic price game model of a dual-channel supply chain in which dual-channel retailer sells products through traditional channel and online channel and the online retailer only sells products through online channel. The stability of the system and the influences of different parameter values on utilities are analyzed emphatically using game theory and nonlinear dynamic theory, such as 2D and 3D bifurcation diagram, parameter plot basin, chaos attractor, and sensitivity to initial value. The results find that the system is more likely to lose stability and fall into chaos with the customer demand fluctuating greatly. The system enters into chaos through flip bifurcation with the increase of the price adjustment speed; adjusting the risk-aversion levels or the fairness concern levels of the two retailers can make the system be in a stable state or delay the occurrence of system instability. When the system is in chaos, the average utility of the online retailer will decrease and one of the dual-channel retailers will increase. Using the state feedback control method, the system can return to a stable state from chaos by selecting appropriate control parameters. The research of this paper is of great significance to the decision-makers’ price decision and supply chain operation management.

Suggested Citation

  • Huang Yi-min & Li Qiu-xiang & Zhang Yu-hao, 2018. "The Complexity Analysis for Price Game Model of Risk-Averse Supply Chain Considering Fairness Concern," Complexity, Hindawi, vol. 2018, pages 1-15, December.
    • Handle: RePEc:hin:complx:9216193
    DOI: 10.1155/2018/9216193
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    References listed on IDEAS

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    1. Ernst Fehr & Klaus M. Schmidt, 1999. "A Theory of Fairness, Competition, and Cooperation," The Quarterly Journal of Economics, President and Fellows of Harvard College, vol. 114(3), pages 817-868.
    2. Wu, Jun & Wang, Shouyang & Chao, Xiuli & Ng, C.T. & Cheng, T.C.E., 2010. "Impact of risk aversion on optimal decisions in supply contracts," International Journal of Production Economics, Elsevier, vol. 128(2), pages 569-576, December.
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