Research on Vertical Relation Arrangement of aviation fuel supply chain

According to the China´s aviation fuel market, the article constructs a supply chain model including three upstream firms and three downstream firms to solve China´s aviation fuel security. Then, we analyze the merger game among the upstream and downstream manufacturers in the condition of scarce supply. Results show that the vertical relation of aviation fuel supply chain will be adjusted and the airlines will merge with the manufacturers to guarantee its supply. However, the strength of policy barriers decides the degree of integration. The degree of integration will be lower when the policy barriers getting stronger.