Market power influential approach using game theory in a two competing supply chains with multi-echelons under centralized/decentralized environments

This paper is considering the competition between two multi-echelon supplychains on price and service under balance and imbalance of market power between the chains which are analyzing through Nash and Stackelberg game approach. The problem is categorized as the centralized or decentralized structure of each chain, which means a few different possible scenarios are developing based on the Nash and Stackelberg games. The aim of the paper is to investigate the simultaneous effect of the chains’ structure and market power on the decision variables. As a surprise result, we show that in the Stackelberg game, the chain will not always have the second-mover advantage. Furthermore, the results demonstrate that the leader's presence in the market may have different impacts on the situation depending on the structure of the chains. Also, when the chains take their decisions sequentially, the service and the price jointly play a strategic role in earning profits. Keywords: Market power, Nash vs. Stackelberg game, pricing, service level, supply chain management.