Bargaining in mobile app supply chain considering members’ fairness concern attitudes

Abstract

The fast-developing mobile app industry has brought challenges to service pricing and profit allocation problems. This study constructs a four-stage game model consisting of a brand mobile app supplier as well as a distributor and takes members’ distributional fairness concern into consideration. We analyze the equilibrium revenue retaining ratio bargaining result, service price as well as the investigation and regulation (I&R) level in different fairness concern models and explore the managers’ employment decisions of supply chain members at equilibrium. Through analysis, we obtain several theoretical contributions and managerial insights. Firstly, while the supplier’s distributional fairness concern drops down both the service price and I&R level, the distributor’s fairness concern exerts no effect on both decisions. Secondly, we show that at equilibrium, the supply chain members would sink into prisoner’s dilemma when the cost coefficient of I&R activity is relatively low. When the cost coefficient is relatively high, the supplier would obtain higher profit while the distributor would suffer profit loss compared with fairness neutral situation and unfortunately the profit gain of the supplier is overwhelmed by the profit loss of the distributor, resulting profit loss of the whole supply chain. Thirdly, we suggest the distributor in mobile app supply chain to control I&R cost for the purpose of attracting the supplier to sign fairness neutral commitment contract, which can avoid supply chain inefficiency. Besides, the government is advised to take intervention measures when the I&R cost coefficient is relatively high.