A Cooperative Coalitional Game in Duopolistic Supply-Chain Competition

Cheng Chang Lin, Chao Chen Hsieh

Research output: Contribution to journalArticle

11 Citations (Scopus)

Abstract

Cooperative coalitional games study the selection of chain partners, the formation of supply chains and outcome allocations. The chain value of a coalition depends on the outcome of inter-chain competition. Subsequently, chain partners may accept their payoffs or decide to defect to another coalition that has made a higher tender offer. The formation and defection continues until a stable Cournot-Nash equilibrium is reached. This is the state where no player may unilaterally defect to another coalition and earn a higher profit. We formulate the cooperative coalitional game as a variational inequality problem and propose an iterative diagonalization algorithm to determine the steady state for the game. The computational results illustrated that (1) supply-chain competition may not necessarily preserve the same level of social welfare; (2) internalization of resources and costs may distort the general competition economy; and (3) wielding the power in a supply chain does not necessarily translate into higher profits.

Original languageEnglish
Pages (from-to)129-146
Number of pages18
JournalNetworks and Spatial Economics
Volume12
Issue number1
DOIs
Publication statusPublished - 2012 Mar 1

All Science Journal Classification (ASJC) codes

  • Software
  • Computer Networks and Communications
  • Artificial Intelligence

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