IDEAS home Printed from https://ideas.repec.org/a/wsi/apjorx/v35y2018i02ns0217595918400055.html
   My bibliography  Save this article

Analysis of Double Marginalization Effect on the Wholesale Price Contract Coordination

Author

Listed:
  • Xin Fang

    (School of Business Planning, Chongqing Technology and Business University, Chongqing 400067, P. R. China2Chongqing Engineering Research Center for Processing, Storage and Transportation of Characterized Agro-Products, Chongqing 400067, P. R. China)

Abstract

Due to double marginalization effect, the wholesale price contract has been proved that it cannot coordinate a decentralized supply chain (DSC) based on the framework of Stackelberg game, in which the upstream firm acts as a leader and the downstream firm acts as a follower. Nevertheless, it has shown that the partnership between the enterprises tends to be equality. Motivated by this factor, this paper studies the coordination of wholesale price contract under the perspective of equality between enterprises. First, an innovative wholesale price contract is constructed and to prove that the constructed contract can flexibly coordinate the DSC. Second, the adaptability of the constructed contract is analyzed and compared with the revenue sharing contract, which is designed under the framework of Stackelberg game. Third, numerical analysis is calculated to verify the effectiveness and operation of the model.

Suggested Citation

  • Xin Fang, 2018. "Analysis of Double Marginalization Effect on the Wholesale Price Contract Coordination," Asia-Pacific Journal of Operational Research (APJOR), World Scientific Publishing Co. Pte. Ltd., vol. 35(02), pages 1-15, April.
  • Handle: RePEc:wsi:apjorx:v:35:y:2018:i:02:n:s0217595918400055
    DOI: 10.1142/S0217595918400055
    as

    Download full text from publisher

    File URL: http://www.worldscientific.com/doi/abs/10.1142/S0217595918400055
    Download Restriction: Access to full text is restricted to subscribers

    File URL: https://libkey.io/10.1142/S0217595918400055?utm_source=ideas
    LibKey link: if access is restricted and if your library uses this service, LibKey will redirect you to where you can use your library subscription to access this item
    ---><---

    As the access to this document is restricted, you may want to search for a different version of it.

    References listed on IDEAS

    as
    1. Hanna Schramm-Klein & Dirk Morschett, 2006. "International Supplier Relationship Management: From Transactional to Relational Purchasing," Springer Books, in: Christian Scholz & Joachim Zentes (ed.), Strategic Management — New Rules for Old Europe, pages 247-270, Springer.
    2. El Ouardighi, Fouad, 2014. "Supply quality management with optimal wholesale price and revenue sharing contracts: A two-stage game approach," International Journal of Production Economics, Elsevier, vol. 156(C), pages 260-268.
    3. Martin A. Lariviere & Evan L. Porteus, 2001. "Selling to the Newsvendor: An Analysis of Price-Only Contracts," Manufacturing & Service Operations Management, INFORMS, vol. 3(4), pages 293-305, May.
    4. Joseph J. Spengler, 1950. "Vertical Integration and Antitrust Policy," Journal of Political Economy, University of Chicago Press, vol. 58(4), pages 347-347.
    5. Barry Alan Pasternack, 1985. "Optimal Pricing and Return Policies for Perishable Commodities," Marketing Science, INFORMS, vol. 4(2), pages 166-176.
    6. Tony Haitao Cui & Jagmohan S. Raju & Z. John Zhang, 2007. "Fairness and Channel Coordination," Management Science, INFORMS, vol. 53(8), pages 1303-1314, August.
    7. Gérard P. Cachon & Martin A. Lariviere, 2005. "Supply Chain Coordination with Revenue-Sharing Contracts: Strengths and Limitations," Management Science, INFORMS, vol. 51(1), pages 30-44, January.
    8. El Ouardighi, Fouad & Kim, Bowon, 2010. "Supply quality management with wholesale price and revenue-sharing contracts under horizontal competition," European Journal of Operational Research, Elsevier, vol. 206(2), pages 329-340, October.
    9. Chakraborty, Tulika & Chauhan, Satyaveer S. & Vidyarthi, Navneet, 2015. "Coordination and competition in a common retailer channel: Wholesale price versus revenue-sharing mechanisms," International Journal of Production Economics, Elsevier, vol. 166(C), pages 103-118.
    Full references (including those not matched with items on IDEAS)

    Citations

    Citations are extracted by the CitEc Project, subscribe to its RSS feed for this item.
    as


    Cited by:

    1. Hannan Amoozad Mahdiraji & Aliasghar Abbasi Kamardi & Moein Beheshti & Seyed Hossein Razavi Hajiagha & Luis Rocha-Lona, 2022. "Analysing supply chain coordination mechanisms dealing with repurposing challenges during Covid-19 pandemic in an emerging economy: a multi-layer decision making approach," Operations Management Research, Springer, vol. 15(3), pages 1341-1360, December.
    2. Chen, Jianxin & Hou, Rui & Zhang, Tonghua & Zhou, Yongwu, 2024. "Newsvendor model for a dyadic supply chain with push-pull strategy under shareholding and risk aversion," Mathematics and Computers in Simulation (MATCOM), Elsevier, vol. 221(C), pages 645-662.

    Most related items

    These are the items that most often cite the same works as this one and are cited by the same works as this one.
    1. Kirshner, Samuel N. & Shao, Lusheng, 2018. "Internal and external reference effects in a two-tier supply chain," European Journal of Operational Research, Elsevier, vol. 267(3), pages 944-957.
    2. Xiangfeng Chen & Anyu Wang, 2012. "Trade credit contract with limited liability in the supply chain with budget constraints," Annals of Operations Research, Springer, vol. 196(1), pages 153-165, July.
    3. Daniel Granot & Shuya Yin, 2005. "On the effectiveness of returns policies in the price‐dependent newsvendor model," Naval Research Logistics (NRL), John Wiley & Sons, vol. 52(8), pages 765-779, December.
    4. Senlin Zhao & Qinghua Zhu, 2017. "Remanufacturing supply chain coordination under the stochastic remanufacturability rate and the random demand," Annals of Operations Research, Springer, vol. 257(1), pages 661-695, October.
    5. Syed Asif Raza, 2022. "A bibliometric analysis of pricing models in supply chain," Journal of Revenue and Pricing Management, Palgrave Macmillan, vol. 21(2), pages 228-251, April.
    6. Li, Zhong-Ping & Wang, Jian-Jun & Perera, Sandun & Shi, Jim (Junmin), 2022. "Coordination of a supply chain with Nash bargaining fairness concerns," Transportation Research Part E: Logistics and Transportation Review, Elsevier, vol. 159(C).
    7. Zhen-juan Xia & Yong Liu & Qi Zhang, 2022. "A dual supply chain revenue sharing contract considering online reviews and rebate," Journal of Revenue and Pricing Management, Palgrave Macmillan, vol. 21(3), pages 321-331, June.
    8. Haresh Gurnani & Murat Erkoc, 2008. "Supply contracts in manufacturer‐retailer interactions with manufacturer‐quality and retailer effort‐induced demand," Naval Research Logistics (NRL), John Wiley & Sons, vol. 55(3), pages 200-217, April.
    9. Chen, Jing, 2011. "Returns with wholesale-price-discount contract in a newsvendor problem," International Journal of Production Economics, Elsevier, vol. 130(1), pages 104-111, March.
    10. Niederhoff, Julie A & Kouvelis, Panos, 2019. "Effective and necessary: Individual supplier behavior in revenue sharing and wholesale contracts," European Journal of Operational Research, Elsevier, vol. 277(3), pages 1060-1071.
    11. Woonghee Tim Huh & Kun Soo Park, 2013. "Impact of transfer pricing methods for tax purposes on supply chain performance under demand uncertainty," Naval Research Logistics (NRL), John Wiley & Sons, vol. 60(4), pages 269-293, June.
    12. Elodie Adida & Georgia Perakis, 2014. "The effect of supplier capacity on the supply chain profit," Annals of Operations Research, Springer, vol. 223(1), pages 1-52, December.
    13. Xia Yan & Shaofu Du & Li Hu, 2020. "Supply chain performance for a risk inequity averse newsvendor," Annals of Operations Research, Springer, vol. 290(1), pages 897-921, July.
    14. Fouad El Ouardighi & Gary Erickson & Dieter Grass & Steffen Jørgensen, 2016. "Contracts and Information Structure in a Supply Chain with Operations and Marketing Interaction," International Game Theory Review (IGTR), World Scientific Publishing Co. Pte. Ltd., vol. 18(04), pages 1-36, December.
    15. Yinghao Zhang & Karen Donohue & Tony Haitao Cui, 2016. "Contract Preferences and Performance for the Loss-Averse Supplier: Buyback vs. Revenue Sharing," Management Science, INFORMS, vol. 62(6), pages 1734-1754, June.
    16. Alaei, Saeed & Setak, Mostafa, 2015. "Multi objective coordination of a supply chain with routing and service level consideration," International Journal of Production Economics, Elsevier, vol. 167(C), pages 271-281.
    17. Biswas, Debajyoti & Rezaee Vessal, Sara, 2024. "Smart home insurance: Collaboration and pricing," European Journal of Operational Research, Elsevier, vol. 314(1), pages 176-205.
    18. Shafiq, Muhammad & Savino, Matteo M., 2019. "Supply chain coordination to optimize manufacturer's capacity procurement decisions through a new commitment-based model with penalty and revenue-sharing," International Journal of Production Economics, Elsevier, vol. 208(C), pages 512-528.
    19. Yao, Z. & Leung, Stephen C.H. & Lai, K.K., 2008. "Analysis of the impact of price-sensitivity factors on the returns policy in coordinating supply chain," European Journal of Operational Research, Elsevier, vol. 187(1), pages 275-282, May.
    20. Terry A. Taylor & Erica L. Plambeck, 2007. "Simple Relational Contracts to Motivate Capacity Investment: Price Only vs. Price and Quantity," Manufacturing & Service Operations Management, INFORMS, vol. 9(1), pages 94-113, January.

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:wsi:apjorx:v:35:y:2018:i:02:n:s0217595918400055. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a bibliographic reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: Tai Tone Lim (email available below). General contact details of provider: http://www.worldscinet.com/apjor/apjor.shtml .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.