Wholesale Price Contract and Quantity Discount Contract Under Competition with Various Games

Abstract

This article analyzes supply chain contracts in a two-tier supply chain system consisting of two competing manufacturers and one retailer. The two manufacturers compete for the order of the only retailer in the downstream. While the manufacturer 1 and the retailer adopted the quantity discount contract and therefore playing the Stackelberg game between them, the other manufacturer – manufacturer 2 adopted a wholesale price contract with the retailer, and playing a bargaining game between them. We find that in the competitive scenario with various games, the quantity discount contract can further expand its superiority and effectively coordinate the supply chain with the presence of the Stackelberg-leader advantage. Quantity discount contract is more advantageous than wholesale price contract.