Mixed financing scheme in a capital‐constrained supply chain: bank credit and e‐commerce platform financing

Abstract

AbstractThis paper studies a three‐echelon supply chain consisting of a commercial bank, an e‐commerce platform, and a capital‐constrained online retailer. Due to limited creditworthiness, the retailer can only obtain a restricted bank loan, while the remaining needs to resort to the e‐commerce platform to fund its business. We formulate a three‐echelon Stackelberg game in which the bank is a leader, the e‐commerce platform is a subleader, and the retailer is a follower. We analytically derive the optimal interest rates of the bank and the e‐commerce platform and the optimal order quantity of the retailer. Compared with the nonfinancing case, we characterize the regions of the interest rates charged by the bank and the e‐commerce platform under which Pareto improvement can be achieved. We also present the retailer's financing preference under equilibrium and show how the initial capital affects the retailer's financing selection. Numerical examples demonstrate that the retailer's order quantity and expected profit increase with the bank's loan ratio.