Revenue-Sharing Versus Wholesale Price Contracts Under Chain-to-Chain Competition

Abstract

We consider price competition with a linear demand function and compare three scenarios. To compare the impact of revenue-sharing or wholesale price contracts on manufacturers, retailers and supply chains. In the three common cases, the maximum profit of retailers, manufacturers and supply chains was analyzed and compared. We consider the interaction between the various links of the supply chain, and through different strategies, achieve the optimal decision of wholesale price and order quantity. By comparing the profit trends between manufacturers, retailers and supply chains, and the difference in profits, we can get different strategies for the supply chain in the two competing supply chains. And the impact of the profits of retailers and manufacturers is significant.