The impact of fairness concern on the three-party supply chain coordination

Abstract

This study employs a duopoly supply chain game model to examine how a firm's horizontal and vertical fairness concerns influence the three-party supply chain coordination. The results reveal that, under equilibrium, a firm's horizontal fairness concern will generate direct influence on its own traditional channel wholesale price and demand, and on its competitor's equilibrium price and profit. In addition, it will also generate indirect and conditional influence on its online channel equilibrium price and demand, and on the common retailer's profit. In comparison, a firm's vertical fairness concern, under equilibrium, will generate direct influence on its online channel equilibrium price and demand, its traditional channel equilibrium demand, and on the common retailer's profit. In addition, it will also generate indirect and conditional influence on its traditional channel equilibrium price, and its competitor's profit. The results of this study extend the current literature by simultaneously incorporating both the horizontal and vertical fairness concerns into the multi-channel supply chain environment. The findings provide compelling insights into how managers can better manage their supply chain strategies when fairness is concerned.