Study On Vertical R&D Alliance And Revenue Sharing Contract For Chain To Chain Competition

As the global economy develops, more and more companies have started toconcentrate on their core business and capabilities, and outsourced non-core functions toothers. Consequently, the paradigm of supply chain has come into being. In order togain competition edge, component companies in a supply chain have to work activelyand intelligently to make sure their supply chain is working effectively and efficiently.Under the chain to chain competition environment, the operation mechanism for eachsupply chain will impact on the performance of the supply chain itself as well as that ofthe competing supply chain, which leads the vertical operation mechanism to impact onthe payoffs of the component companies. As a result, the dominant conditions and thedesign mechanisms for each competing supply chain’s vertical coordinating cooperationcan provide supports both on theory and decisions to the component companies.The chain to chain competition model is proposed by Game theory, and the verticalR&D alliance as well as the revenue-sharing contract for chain to chain competition isexplored, aiming at maximizing the chain-wide profit by which both the manufacturerand supplier can be better off. Specially, this thesis is composed of three individual parts:Cost-reducing vertical R&D alliances with revenue-sharing/profit-sharing contracts forcompeting supply chains; vertical channel structure choices and revenue-sharingcontracts for competing supply chains with pay-needed extended warranty services ofmanufacturers; revenue-sharing contracts for competing supply chains under uncertaintyenvironment.First of all, it is studied that the design and the choice for cost-reducing verticalR&D alliance with revenue-sharing/profit-sharing contract, and it is analyzed that theimpacts of the competition, R&D efficiency and technology spillover on evolutionequilibrium of vertical structure choice game between two competing supply chains.The first contents of this thesis are divided into three parts as follows:(1) Setting focus on chain to chain price competition model in which the upstreamfirms are leaders, the design and the evolution of cost-reducing vertical R&D alliancewith revenue-sharing contract are identified. The results suggest that if product competition intensity is in the lowest range, or product competition intensity is in thelower range and R&D efficiency is higher, chain to chain competition based on verticalalliances will be the dominant equilibrium, which can improve all the performances ofthe suppliers and manufacturers.(2) Setting focus on the chain to chain price competition model in which thedownstream manufactures are leaders, the design and the evolution of cost-reducingvertical R&D alliance with profit-sharing contract are identified. The results suggestthat if product competition intensity is in the range of lowest level, or productcompetition intensity is in the range of lower level as well as R&D efficiency is higher,chain to chain competition based on vertical alliances will be the dominant equilibrium,which can achieve the Pareto improvement of performances for all the suppliers andmanufacturers. The manufacturers obtain more supply chain profits by their positions ofthe leadership.(3) Based on the chain to chain price competition model in which the downstreammanufactures are leaders, it is further supposed that there exists technology spillover forR&D. The design and the evolution of cost-reducing vertical R&D alliance withprofit-sharing contract are identified. The results suggest that with least intensivecompetition or less intensive competition together with higher spillover or moreintensive competition together with higher spillover instead of perfect spillover, bothtwo supply chains will form alliances with profit-sharing contracts by which all themanufacturers and suppliers can be better off.Secondly, supposing that the manufacturers provide pay-needed extended warrantyservices, the choices for vertical channel structures of two competing supply chains areanalyzed. It is further revealed that the impacts of the extended warranty period lengthand the competition on evolution equilibrium of vertical channel structure choice gamebetween two competing supply chains, and the dominant condition as well as the designfor revenue-sharing contract. The main studying contents of this part are listed asfollows:By constructing a chain to chain price competition model in which the upstreammanufacturers provide pay-needed extended warranty services, the dominant verticalchannel structure choice strategies that can achieve performance improvement of thesupply chain are identified. The vertical channel structure evolution equilibria with different lengths of extended warranty period and competition status are also revealed.It is implicated that if product competition intensity is lower, the two decentralizedsupply chains both have motivations to conduct revenue-sharing sharing contract, bywhich both component companies can be better off.Finally, the choices for vertical revenue-sharing contract of competing supplychains under uncertainty environment are explored, and the interactions of competitionand the supply risk on evolution equilibrium of the vertical contract choice gamebetween two supply chains are revealed. There are two contents for this part:(1) Focusing on capacity decision and order decision of supply chain undermulti-risk environment, by constructing a two-stage dynamic model under which themanufacturer and the retailer should make decision under different cost risks anddemand risk environment, the relation of the supply chain operational performance andthe multi-risk, the conditions under which the risks will impact the operationalperformance as well as the intensity of the impact are all revealed. At last, theintuitionistic conclusions and managerial enlightenment are obtained by numericalanalysis.(2) Expanding the study from oligopoly supply chain to two competing supplychains, a chain to chain quantity competition model based on supply uncertainty ofsuppliers is constructed, by which the design and the evolution of revenue-sharingcontract are identified. The results suggest that with lower product competition orhigher product competition together with higher supply risk, chain to chain competitionbased on revenue-sharing contract will be the dominant equilibrium, which can improveall the performances of the suppliers and retailers.