Vertical Structure Choice of Multi-Supply Chains Competition

Abstract

This paper focuses on the vertical structure choice of multi-supply chains competition. By controlling the number of integrated and decentralized supply chains, we discuss the Nash equilibrium under hybrid scenario, and show that when the market share of each supply chain is less than the average, a appropriate competition is benefit to increase the supply chain profit, but with the strength of competition, the supply chain profit trends to decrease. Further, we compare the industry profit of competitive supply chains under three different scenario, and find the intensity of product competition will impact on the equilibrium structure of the supply chains when each of supply chains has the same market share. However, when the intensity of competition is fierce, the pure decentralized supply chain structure will be better than that pure integrated structure, the hybrid structure whether dominate depends on the number of integrated and decentralized supply chains.