Competitive Supply Chain Pricing Decisions Considering Diseconomies Of Scale Under Different Decision-Making Status

With the process of economic globalization,supply chain competition has become the main form of competition in industries.For two competitive supply chains with diseconomies of production scale,in two cases of unequal and equal decision-making positions of the two chains,pricing/service decisions and members’ profits under four power structure combinations are analyzed and compared(both chains are manufacturer-led,both chains are retailer-led,the leader chain is manufacturer-led and the follower chain is retailer-led,the leader chain is retailer-led and the follower chain is manufacturer-led).In this process,the influences of important parameters such as degree of diseconomies of scale,competition intensity between two chains and the service negative spillover effect are revealed.The research shows that:(1)Regardless of whether the decision-making status of the two chains is equal or not,the members of each chain can benefit from the leader status.When the status of the two chains is unequal,if the power structure of the leading chain is given,the members of leading chain and the whole leading chain hope that the retailer dominates the following chain.Manufacturer-led is the dominant strategy of the leading chain,while there is no dominant strategy of power structure selection for the following chain.In MM model and RR model where the leaders of the two chains are the same,there exists a phenomenon of "second-mover advantage".When the status of the two chains is equal,the retailer of the given chain hopes that the competing chain will be led by the retailer.From the perspective of the manufacturer of the given chain,when it is the leader of the chain,if the competition between the two chains is especially smooth or the competition is not especially smooth but the degree of diseconomies of scale is higher than the threshold,it hopes that the competing chain is led by the retailer,otherwise it prefers that the competitive chain be led by the manufacturer.For the entire chain,in most cases,NMR model can make the given chain obtain the highest profit,but when the competition is very fierce,NMM model or NRR model may be more beneficial for the given chain.(2)Compared with a monopoly chain which is treated as a benchmark,when a competing chain with the same(or relatively weak strength)as the original monopoly chain enters the market,if the original monopoly chain maintains its own power structure unchanged,it will definitely increase the selling price and market demand.Even if the original monopoly chain changes its power structure,it is more likely to increase the price and market demand,and a small probability case occurs depending on the competition intensity between the two chains and the degree of diseconomies of production scale.In most cases,the original monopoly chain can benefit from the market entry of the competing chain.Only when the original monopoly chain led by the manufacturer is transformed into a retailer-led one,and the competition intensity and scale diseconomies of the two chains meet certain extreme conditions,the original monopoly chain suffers a loss.(3)When there is a service negative spillover effect,if the decision-making status of the two chains is unequal,the leading chain obtains the highest profit and the lowest profit in MR model and RM model,respectively.Under the condition that extremely fierce competition between two chains and extremely low service spillover effect are,the leading chain choosing manufacturer-led can be more beneficial to the following chain,otherwise in other cases the following chain hopes that the leading chain to be retailer-led.If the status of the two chains is equal,when the power structure of the service-unproviding chain is given,manufacturer-led always outweighs retailer-led for the service-providing chain.For the service-unproviding chain,no matter which power structure of itself is,the service-providing chain choosing retailer-led is always conducive to its higher profit.In case of the same power structure of the two chains,if the status of the two chains is unequal,the leading chain providing service can offset the second-mover advantage of the following chain to a certain extent.If the status of the two chains is equal,the service-providing chain can always gain a competitive advantage over the service-unproviding chain.The above conclusions can provide decision-making support for enterprises to make reasonable pricing and service decisions based on their supply chain competitive environment,decision-making status and production cost in reality.