Research on supply chain versus supply chain competition with product quality and price dependent demand

This paper firstly studies the quality and pricing competition between two supply chains providing two kinds of substitutable products with product quality and price dependent demand for an identical market, where each supply chain (Simply denoted as SC) consists of one manufacturer and one retailer. EPEC (Equilibrium Problems with Equilibrium Constrains) model, MPEC (Mathematical Programs with Equilibrium Constrains) model and Nash equilibrium model are set up by using game theory and equilibrium analysis method, which respectively characterize the competition equilibrium between two centralized SCs, two decentralized SCs, one centralized SC and one decentralized SC. Secondly, a profit-sharing contract is put forward to coordinate one decentralized SC to be centralized SC under SC vs. SC competition. Finally, numerical examples show the correctness of the models and the validity of the contract. It shows that coordination is a dominant strategy, and consumer are the beneficiaries who can obtain more consumer welfare since SC coordination leads lower retail prices and more supply quantities.