Analysis of a dual-sourcing service provision game with symmetric and asymmetric vendors

Chung Chi Hsieh, Pao Li Kuo

Research output: Contribution to journalArticle

7 Citations (Scopus)

Abstract

This paper models a service provision game between two vendors under symmetric and asymmetric cost structures, who compete in first-period service quality levels with each other, with the aim of winning the larger share of the buyer's fixed reward in the second period. This game differs from the previous studies in that the buyer maintains dual sourcing over two periods and thus has different characteristics. We show that this service provision game has distinct mixed-strategy equilibria with the vendors under symmetric and asymmetric cost structures. We find that the larger the winner's share in the second period, the higher the vendors' first-period service quality levels. However, increasing the winner's share in the second period does not necessarily benefit the vendor with the lower marginal cost, but surely hurts the equilibrium profit of the vendor with the higher marginal cost.

Original languageEnglish
Pages (from-to)3998-4007
Number of pages10
JournalApplied Mathematical Modelling
Volume35
Issue number8
DOIs
Publication statusPublished - 2011 Aug 1

All Science Journal Classification (ASJC) codes

  • Modelling and Simulation
  • Applied Mathematics

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