How to Implement the Wholesale Price Contract: Considering Competition between Supply Chains

In this paper,we develop the price competition model of two supply chains,in which each supply chain includes one core manufacturer and one retailer,respectively.The manufacturer in each supply chain sells products to the retailer through a commonly-used wholesale price contract.Each manufacturer has two options to implement the wholesale price contract:playing the Stackelberg game with the retailer and playing the bargaining game with the retailer.Based on the manufacturer's two alternative performing modes in each supply chain,we consider four combined performing modes of two competitive supply chains in the model.By comparing equilibrium results,we find that when both manufacturers choose to bargain with retailers,the sales volume increases and the sales price decreases.Moreover,the manufacturers'mode option is affected by bargaining power,product quality level,and the cost of improving product quality.Specifically,when both bargaining power and the cost of improving product quality are relatively small,both manufacturers choose to play Stackelberg game with retailers.When manufacturers'bargaining power is sufficiently large,regardless of the cost of improving product quality,both manufacturers choose to bargain with retailers.Surprisingly,when the manufacturer chooses to bargain the wholesale price with the retailer,higher product quality is not always beneficial to the retailer because the retailer may have to share part of the cost of the manufacturer.

Effect of contract choice on upstream carbon emission reduction considering carbon taxation

In order to curb the manufacturer’s product carbon emission levels, the leading retailer usually offers three contracts to the manufacturer, i.e., wholesale-price contract(WC), cost-sharing contract(CC) and revenue-sharing contract(RC). The results of implementing the three contracts are discussed and compared. The results reveal that as long as the government levies carbon taxations, all the three contracts can effectively stimulate the manufacturer to invest in carbon emission reduction. Among the three contracts, RC can achieve the highest level of carbon emission reduction of products and the maximum profits for both the manufacturer and retailer in a supply chain. However, the RC fails to reach the level of the centralized supply chain(CSC), thus it cannot coordinate the supply chain. The supply chain members’ contract choices are consistent. Both members prefer RC to the other two contracts. In order to effectively reduce the manufacturer’s carbon emission levels, the government should impose the highest carbon taxation level under RC, the medium carbon taxation level under CC, the lowest carbon taxation level under WC, and the same carbon taxation level as RC under the CSC.