On cooperation and competition between upstream and downstream companies in supply chain

Abstract

This article explores the competition relationship between three subjects: suppliers, manufacturers and retailers in light of perceptions of competition and cooperation in game theory. It is structured in two parts. First part is an analysis on a two-tier competition mode between suppliers and retailers; in the second part, suppliers are added therein and three-tier competition mode is established, next the analysis is conducted by categorizing retailers' activities into two kinds: cooperation and competion; As for targeted retailers, which are the main subject for discussion, due to the fact that optional upstream manufacturers are unsame and prices and quantities of products they provide are different, retailers have to determine quantity of goods to purchase according to actual costs. The major intent of this article is to, from the perspective of retailers, via formulating a game mode, through testing of reference data, examine a variety of forms of retailers' copetition under game theory.