The impacts of distributional and peer-induced fairness concerns on the decision-making of order allocation in logistics service supply chain

Abstract

This paper investigates the order allocation of logistics service supply chain (LSSC) that consists of one logistics service integrator (LSI) and two competing functional logistics service providers (FLSPs) who participate the allocation successively. FLSPs have different fairness concerns. It is found that the optimal utility of LSI increase with the latter FLSP’s peer-induced fairness concern, and decrease with the incumbent FLSP’s distributional fairness concern. Because LSI expects FLSPs with more of peer-induced fairness concern and less of distributional fairness concern, an incentive contract is proposed which could improve LSI’s utility when the parameters meet certain conditions.