Abstract
Aiming at the price competition and service competition between airport stores, based on a dual-channel supply chain competition model construct of an airport and a franchise store, by analyzing the impact of price and service competition on their sale decisions, this paper studies how to design the optimal franchise contract. Furthermore, a numerical simulation is given to illustrate the influence of different competitive intensity on their behaviors and the performance of the supply chain. The result shows that: 1. Franchise contract with uniform price can lead to a higher price and higher service level due to the elimination of price competition, while franchise contract with uniform service level can lead to a lower price and lower service level due to the elimination of service competition. 2. Compare to airport, franchise store can earn more sale revenue with the advantage of backwardness when the price competition is dominated. 3. Franchise contract with uniform price can lead to a higher performance of the supply chain when price competition is dominated, while uniform service level can lead to a higher performance of the supply chain when service competition is dominated.
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