Abstract
This paper considers a two-echelon pharmaceutical supply chain comprising two pharmaceutical manufacturers and a pharmacy. We derive optimal decisions for three different supply chain power structures considering two scenarios: one scenario featuring quality regulation, and one without. By comparing the equilibriums of the two regulatory scenarios under different power structures, we then evaluate the effects of quality regulation and power structure on pharmaceutical firms' decisions, profits and social welfare. Our results show that the product differentiation between two pharmaceutical manufacturers will be reduced through quality regulation, serving to intensify price competition between them. This has a negative impact on the two pharmaceutical manufacturers but a positive effect on the pharmacy's profit. However, an appropriate level of minimum quality standards can enhance social welfare and the economic performance of the whole pharmaceutical supply chain, resulting in a win-win outcome. In addition, our results demonstrate that the balanced power structure has a positive effect on the pharmaceutical supply chain's economic performance and social welfare.
Sign-in/Register to access full text options 
Talk to us
Join us for a 30 min session where you can share your feedback and ask us any queries you have
Schedule a callDisclaimer: All third-party content on this website/platform is and will remain the property of their respective owners and is provided on "as is" basis without any warranties, express or implied. Use of third-party content does not indicate any affiliation, sponsorship with or endorsement by them. Any references to third-party content is to identify the corresponding services and shall be considered fair use under The CopyrightLaw.
