Abstract
We develop game-theoretic models to examine the manufacturer’s vertical integration strategies in a three-tier supply chain with two suppliers, one manufacturer, and two retailers. The supply chain sells two quality-differentiated products. We find that when quality is exogenous, regardless of the existing supply chain structure, the manufacturer’s choice of forward or backward integration strategy depends on the relative efficiencies of two products. When quality is endogenous, however, the existing supply chain structure does affect the manufacturer’s integration strategy decision. Although backward integration hurts the unintegrated supplier, forward integration can lead to a win-win outcome for the manufacturer and unintegrated retailer.
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 callMore From: Transportation Research Part E: Logistics and Transportation Review
Disclaimer: 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.
