Pricing in two competing supply chains based on market power and market size under centralized and decentralized structures

This study considered the competition between two multi-echelon supply chains with identical structures on price under two market power structures. For this purpose, two different scenarios were developed. In the first scenario, both supply chains decided simultaneously (the Nash game). In the second scenario, due to the imbalance of power between the two supply chains, the Stackelberg game was adopted in the model. The paper investigated the effects of different relations between the market sizes of supply chains and the supply chain structures on price and profit along with the analysis of power in the market. Based on these assumptions, it was found that the supply chains did not always involve the second-mover advantage in the price Stackelberg game. Furthermore, having the centralized structure, both of the supply chains benefited from the presence of a leader in the market for different combinations of market size. Moreover, the relationship between price and profit was analyzed given the size of the market in different scenarios rather than through provision of numerical examples. (C) 2021 Sharif University of Technology. All rights reserved.

Automated summary

This study analyzed the price competition between two multi-echelon supply chains with identical structures under different market power structures. It found that supply chains did not always have the second-mover advantage, and both supply chains benefited from having a leader in the market under a centralized structure for different market size combinations.