TY - JOUR
T1 - A note on competitive supply chains with generalised supply costs
AU - ATKINS, Derek
AU - LIANG, Liping
PY - 2010/12/16
Y1 - 2010/12/16
N2 - This note generalises models from two influential papers in the theory of supply chain outsourcing under competition: McGuire and Staelin (1983) and Cachon and Harker (2002). The first paper studies the impact of competitive intensity on the outsourcing decision from the supplier's point of view for linear supply cost; the second paper examines the impact of supply economies of scale from the retailer's point of view when selling perfectly substitutable products. By considering competitive intensity and supply economies of scale simultaneously, we find that equilibrium channel structures are primarily determined by the competitive intensity, which is true even under supply diseconomies of scale; the key message in the second paper of scale economies driving retailer's outsourcing supply decision is highly dependent on the assumption of perfect substitutes. Our finding has no qualitative difference when either the suppliers or the retailers are modeled as the channel leader and make the outsourcing decisions.
AB - This note generalises models from two influential papers in the theory of supply chain outsourcing under competition: McGuire and Staelin (1983) and Cachon and Harker (2002). The first paper studies the impact of competitive intensity on the outsourcing decision from the supplier's point of view for linear supply cost; the second paper examines the impact of supply economies of scale from the retailer's point of view when selling perfectly substitutable products. By considering competitive intensity and supply economies of scale simultaneously, we find that equilibrium channel structures are primarily determined by the competitive intensity, which is true even under supply diseconomies of scale; the key message in the second paper of scale economies driving retailer's outsourcing supply decision is highly dependent on the assumption of perfect substitutes. Our finding has no qualitative difference when either the suppliers or the retailers are modeled as the channel leader and make the outsourcing decisions.
KW - Marketing
KW - channel competition
KW - supply chain outsourcing
UR - http://commons.ln.edu.hk/sw_master/184
UR - http://www.scopus.com/inward/record.url?scp=77957699585&partnerID=8YFLogxK
U2 - 10.1016/j.ejor.2010.07.012
DO - 10.1016/j.ejor.2010.07.012
M3 - Journal Article (refereed)
SN - 0377-2217
VL - 207
SP - 1316
EP - 1320
JO - European Journal of Operational Research
JF - European Journal of Operational Research
IS - 3
ER -