Pricing Research On The Third-party Logistics Service Under The Bilateral Competition

With the geographic expansion of manufacturing in resource, manufacture and sales, thedevelopment of third-party logistics service providers which is a strategic partner of manufacturersin the supply chain extends to the whole world. The third party-logistics service provider becomes apowerful tool to improve the performance of supply chain based on its own advantage. In theprocess of improving the performance of supply chain, it is particularly important of thecooperation and coordination among channel partners. Thus the contract decisions and profitdistributions between manufacturers and third-party logistics service providers which are the typicalchannel partners in the supply chain have received the widespread attention. However, withoutcomprehensively and fully considering the actual situation of the third-party logistics transaction,transaction characteristics and so on, there are no useful pricing methods which can allocate profitbetween both parties reasonably. This will not be able to alleviate the price war of currentthird-party logistics industry. According to the urgent situation, this paper will research the solutionof the problem which is related to the benefit allocation between manufacturers and third-partylogistics service providers based on the market environment of bilateral competition which issatisfied with the real environment of third-party logistics transaction.Through the analyzing of existing research in the field of services pricing of third-partylogistics, we find that there is a gap between the existing research and the real demand of third-partylogistics transaction in the aspects of competitive environment, information symmetry, theinfluencing factors of logistics demand and decision-making mode. Bring the four aspects into theprocess of building the pricing model, and combine the process of third-party logistics transactionand its characteristics, this paper simplifies the logistics transaction process in the case ofnon-cooperation to two-stage dynamic non-cooperative game, and simplifies the logisticstransaction process in the case of cooperation to bargaining cooperative game with the transferableutility based on the related game model of Game Theory. Then this paper builds a basic model ofthird-party logistics service pricing with the cooperative and non-cooperative decision in the marketenvironment of bilateral competition. Bring the factor that logistics service level influences theproduct demand of manufacturers into the model building, this paper simplified the logisticstransaction process in the case of non-cooperation to three-stage dynamic non-cooperative game,and simplified the logistics transaction process in the case of cooperation to bargaining cooperativegame with the transferable utility based on the Game Theory, then build an extension model ofthird-party logistics service pricing with the cooperative and non-cooperative decision in the market environment of bilateral competition which is satisfied with the environment of third-party logisticstransaction and interests of both parties, and using Comparative Static Equilibrium Analysis andDynamic Equilibrium Analysis to analyze the nature of the model. Finally, in order to verify thevalidity of the model, this paper uses Numerical Simulation to compare simplified pricing extensionmodel and the corresponding equilibrium model with Cost Plus Pricing Method.This research finds that the basic model of this paper can encourage manufacturers to reduceproduction cost, and can inspire logistics service providers to reduce service cost; when both partiescooperate, they can gain more profit than non-cooperation. In the extension model, cooperation isnot necessarily the best choice, and more profits may be gained in the non-cooperation; theextension model can inspire manufacturers to reduce production cost and logistics service providersto enhance service ability. Simulating the simplified pricing extension model and the correspondingequilibrium model with Cost Plus Pricing Method, this paper finds that among manufacturersreduce production cost, logistics service providers improve service ability, and both of them, bothparties select the simplified pricing extension model in the case of cooperation which this paperbuilds can gain more profits than select other pricing method.