Research On Competition - Based Procurement And Green Product Taxation

Price volatility in commodity sourcing is regarded as a major supply chain risk. Motivated by the recent fierce price fluctuation of many commodities, this paper focuses on the effect of procurement price volatility in a competitive setting. As well as the Bertrand competition between the green and common products. Consider the issues of tax subsidies under the maximization of social welfare. The structure of this paper is organized as follows:In chapter 1, Introduction part. In this section, we introduce the research background, present situation, the main research results and innovation points of this paper.In chapter 2, We consider a situation where two firms use a commodity to produce a substitutable product. The two firms first engage in a sourcing game by choosing either contract procurement or spot sourcing, and then compete in a Cournot game by determining their outputs according to their private demand forecasts. Our study reveals that the price volatility affects the output adjustment of the firms through the demand-side and cost-side effects of the demand forecast. Firms decide their output decision. They can purchase materials from contract with a fixed price or buy them directly from the spot market. The random spot price of the commodity and the uncertain demand of the product are correlated. Thus the firms’ demand forecasts also update their respective believes on the spot price. As a result, the performances of the firms may increases in the price volatility when the demand and spot price are positively correlated and the price volatility is relatively large. Interestingly, the improvement of a firm’s forecast accuracy may benefit its rival when they adopt different sourcing modes. This paper also provides practical insight. The recent fierce price fluctuations of many commodities are not always bad news for firms.In chapter 3, The equilibria of the sourcing game are driven by both the price volatility and the competition intensity measured by either the market size or the forecast correlation. When contract procurement has cost advantage, both firms choose contract procurement to seek cost saving if the price volatility is relatively low. They pursue differentiated sourcing modes to dampen the market competition if the price volatility is moderate, and adopt spot sourcing to utilize the cost-side effect of the demand forecast if the price volatility is relatively large. This paper also provides practical insights. By the virtue of spot sourcing, some firms may benefit from price volatility. Spot sourcing provides small or medium-scale firms an effective strategy to compete with large-scale firms who have procurement cost advantage. We summarize that, utilizing the cost-side effects of demand forecast and dampening market competition may be two new reasons to explain the prevalence of spot sourcing.In chapter 4, We build the piecewise demand function and consider the Bertrand competition between the green and common products. To provide a reference and basis for the government to support green products in tax subsidies.In chapter 5, Conclusion and Prospection.