A Study of Supply Chain Decision-Making Considering Bilateral Power Equivalence from the Perspective of fairness Concerns

Abstract

This paper explores the supply chain decision-making problem under bilateral power equivalence based on the equity concern perspective. Specifically, the equilibrium solutions of the Nash game under risk-neutral, supplier fairness concern and retailer fairness concern are derived and comparatively analysed in the case of power equivalence between upstream and downstream firms in the supply chain. The results show that the retail price is largest when the retailer has fair concern preferences, followed by the risk-neutral and supplier fair concern preferences; the production inputs and the supplier's expected profit are largest when the supplier has fair concern preferences, followed by the risk-neutral and retailer fair concern preferences; the retailer's expected profit is largest when the retailer is risk-neutral, followed by the risk-neutral and supplier fair concern preferences; the retailer's expected profit is largest when the retailer has fair concern preferences, followed by the supplier fair concern preferences, followed by the retailer fair concern preferences. Retailers' expected profits are largest when they are risk-neutral, followed by when retailers have a fair concern preference and smallest when suppliers have a fair concern preference.