Supply Chain Contracts Considering Fairness Concerns

With the global economic integration and rapid development of information technology, supply chain management, as an integrated managerial thought and methods, are increasingly becoming the focus of theory and business community. The success of supply chain operation mostly depends on its managerial ability to coordinate the supply chain. With selfish behavior and asymmetry information, supply chain members'decision-making will always conflict with the overall interests of supply chain system. So there is necessary to establish effective coordination mechanisms. Contracts are the main methods for supply chain to achieve the perfect coordination, that is, design contract and adjust the contract parameters to incentive supply chain members to regulate the internal distribution of profits in order to maximize the whole profits of supply chain.Research related to supply chain coordination and contracts has attracted widespread concerns of scholars. All of the studies basically assume that decision maker is perfect rational: subject makes decision just for maximizing his benefits. There is a lot of behavioral economics suggesting that decision maker may be bounded rational, specifically manifested in some behavior, such as fairness concern,reference dependence. The research on supply chain contracts and coordination considering behavior is still at its initial stage. Although there has been some progress, current studies on supply chain contracts involving behavior are extremely rare, especially with regard to fairness concerns, which are lack of a comprehensive theoretical framework. Therefore, based on the newsvendor model, this thesis investigates the impact on supply chain contracts and coordination induced by the behavior of fairness concerns.According to different ideas, this paper can be divided into two parts: The first part focuses on absolute fairness of profit, the discussion lies in Chapter 3. In this paper the retailer regards the supplier's profit as his fair reference point, namely, absolute fairness of profit. Meanwhile, we also take into account retailer's subjective utility affected by positive difference and negative difference. Based on newsvendor model, we introduce fairness concerns into supply chain contracts and set up new behavioral model. Then we discuss how the retailer's behavior of fairness concerns influences the coordination of supply chain under wholesale-price contract, buyback contract and revenue-sharing contract.The second part focuses on relative fairness of profit. The discussion lies in Chapter 4 and Chapter 5. The most important innovation is to use game theory to establish a new fairness concern framework, which proposes a program of balanced distribution of profits from the perspective of each party's ability or contribution. In Chapter 4, we set up a fairness concern framework based on Nash bargaining model, and build a utility system about fairness concerns on the basis of models in Chapter 3. We assume that only the retailer has behavioral tendencies of fairness concern. It is discussed how the retailer's behavior of fairness concerns influences the supply chain member's decision under newsvendor background. Chapter 5 extends Chapter 4 to the case of decision-makers'subjective utility induced by fairness concerns of supplier as well as retailer. In this section, we start behavioral research on wholesale price contract, and investigate the impact on supply chain member's optimal decisions induced by the behavior of fairness concerns under the case of endogenous and exogenous wholesale price respectively.The research of this paper closely links traditional supply chain contracts and behavior of fairness concerns. It not only extends the research scope of supply chain contracts theory in academic, but also provides guidance for supply chain members in practice.