Game theoretical analysis of supply chain configurations

Abstract

In this paper, we propose a game theoretical analysis of supply chain configurations for two manufacturers and two retailers. The supply chain configuration is the structure of the leader-follower relationship in the decentralized decision making of pricing decisions for manufacturers and retailers. The effects of the supply chain configurations on the total profit are investigated. The closed-form equilibrium solutions are derived through the backward induction. The results demonstrate that the change of leader-follower relationship in the supply chain configuration according to the situations enable us to obtain higher total profit.