A note on competitive supply chains with generalised supply costs

Derek ATKINS, Liping LIANG

Research output: Journal PublicationsJournal Article (refereed)peer-review

18 Citations (Scopus)


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.
Original languageEnglish
Pages (from-to)1316-1320
Number of pages5
JournalEuropean Journal of Operational Research
Issue number3
Publication statusPublished - 16 Dec 2010


  • Marketing
  • channel competition
  • supply chain outsourcing

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