Game theoretical models in supply chain management

The thesis consists of three projects under the umbrella of competition and cooperation in supply chains using game theory.;The first two projects consider a decentralized framework in which retailers are allowed to transship their inventories after meeting local demand. The first project studies a repeated newsvendor game with transshipments, in which residual profits are allocated through dual allocations. It has been shown that, in a single-shot game, retailers will withhold their residuals in equilibrium. However, the results in this project suggest that, when the discount factor is large enough and the game is repeated an infinite number of times, there is a subgame perfect Nash equilibrium in which retailers would share all of the residuals. Asymptotic behavior in retailers' order quantities and threshold discount factors are analyzed, and the conditions or contract under which a first-best outcome can be achieved are discussed.;The second project compares dual allocations with another method that is used to allocate the profit generated by the transshipment: transshipment prices. While dual allocation is easy to implement with two retailers, it may become intractable when the number of retailers increases; on the other hand, transshipment prices can be applied to any number of retailers. The result suggests that transshipment prices are better at coordinating retailers that are more alike, while dual allocations work better on more asymmetric retailers. In addition, expected dual prices are found to be equivalent to coordinating transshipment prices when retailers are symmetric. Heuristic transshipment prices for any number of retailers are developed based on this equivalency.;The third project sets up a framework for analyzing industries with sustaining and disruptive technologies. Products based on sustaining technology are perceived to be superior to those based on disruptive technology, but the latter have a broader customer base. Examples include landline services vs. VoIP, and laser printers vs. ink-jet printers. We study two firms, an entrant that can use only disruptive technology and an incumbent that can use both technologies, and characterize equilibria in both deterministic and stochastic games.