Journal
EUROPEAN JOURNAL OF OPERATIONAL RESEARCH
Volume 200, Issue 1, Pages 227-234Publisher
ELSEVIER SCIENCE BV
DOI: 10.1016/j.ejor.2008.11.049
Keywords
Supply chain management
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We consider price competition with a linear demand function and compare two cases. In the first case each distribution channel is vertically integrated, while in the second, decentralised, case the manufacturers and retailers act independently. We explore the effect of varying the level of price competition on the profits of the industry participants and demonstrate the important role played by the spread of underlying market shares. The coefficient of variation of these market shares determines whether decentralised supply chains can outperform integrated supply chains with an appropriate level of competition. Crown Copyright (C) 2008 Published by Elsevier El.V. All rights reserved.
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