Structure And Performance Study Of Master-slave Chain Competition

With the development and evolution of the process of economic globalization, the idea of supply chain has been widely recognized. Many SMEs have shown great interesting on building their own supply chain system, even already established their own systems. These new supply chains with small enterprises are competing with the mature supply chains which contain large companies and transnational business in the market. These new elements in the supply chains competition have shown their impact in the market structure. But, these new chains will refer to the price strategy from other supply chains with large scale because they don’t have the power to compete directly with the mature supply chains.Considering the situation that the market influence of the competitive supply chain is not equal, this paper builds a model with two supply chains of a decision sequence to investigate the supply performances and game equilibrium of different control structure combinations under chain to chain competition. After that, we expand the model to the other two conditions. We bring the character of diseconomy of scale in the production progress of manufacturers and the service competition into the model and investigate how the factors (diseconomy of scale and the intensity of service competition) affect the choices of vertical structures and the supply chain performance. When comes to the diseconomy of scale, we also discuss whether two part tariff contract could help to achieve supply chain coordination and the Pareto improvement between the members for further study.The results show that, in the normal competition without other factors, When there is wide gap of market scale between the two supply chains, with the intensity of competition increases, the profits of the leader chain will decline gradually while the follow chain rise gradually, in the situation of diseconomy scale, the ratio of diseconomy of scale won’t affect the equilibrium structure and the profit of the follow chain will increase with competitive ratio increasing under the equilibrium structure. When the intensity of market competitive is weak, the reasonable two fixed price contract could help to achieve the supply chain coordination while both the manufacturer and retailer could have Pareto improvement, in the situation of service competition, when the service competition is very intense, the competition won’t occur. When the intensity of service competition is in a rational scale, the leader supply chain won’t pay a close attention to it. However, the follow supply chain could just use the differentiation competition to seize the market quickly.