COMPETITION IN A DUAL-CHANNEL SUPPLY CHAIN CONSIDERING DUOPOLISTIC RETAILERS WITH DIFFERENT BEHAVIOURS

Abstract

We study competition in a dual-channel supply chain in which a single supplier sells a single product through its own direct channel and through two different duopolistic retailers. The two retailers have three competitive behaviour patterns: Cournot, Collusion and Stackelberg. Three models are respectively constructed for these patterns, and the optimal decisions for the three patterns are obtained. These optimal solutions are compared, and the ef- fects of certain parameters on the optimal solutions are examined for the three patterns by considering two scenarios: a special case and a general case. In the special case, the equilibrium supply chain structures are analysed, and the optimal quantity and profit are compared for the three different competitive be- haviours. Furthermore, both parametric and numerical analyses are presented, and some managerial insights are obtained. We find that in the special case, the Stackelberg game allows the supplier to earn the highest profit, the retailer playing the Collusion game makes the supplier earn the lowest profit, and the Stackelberg leader can gain a first-mover advantage as to the follower. In the general case, the supplier can achieve a higher profit by raising the maximum retail price or holding down the self-price sensitivity factor.