TY - JOUR
T1 - Channel coordination under fairness concerns and nonlinear demand
AU - Caliskan-Demirag, Ozgun
AU - Chen, Youhua
AU - Li, Jianbin
N1 - Funding Information:
This research was partially supported by Hong Kong RGC Grant No. 410906 and NSFC Grant No. 70901029 . The authors thank the editors and reviewers for the constructive comments and suggestions, which helped to improve this paper.
PY - 2010/12/16
Y1 - 2010/12/16
N2 - The supply chain literature analyzing supplier-retailer contracts and channel coordination has typically focused on profit or revenue maximization as the members' sole objective. In such settings, it is well known that a simple wholesale price contract is not effective in coordinating the channel due to double marginalization. Recently, Cui et al. [Cui, T.H., Raju, J.S., Zhang, Z.J., 2007. Fairness and channel coordination. Management Science 53 (8) 1303-1314] introduced the members' fairness concerns into channel coordination. Assuming a linear demand function, the authors show that a coordinating wholesale price contract can be designed when only the retailer or both parties are concerned about fairness. In this paper, we extend the authors' results to other nonlinear demand functions that are commonly used in the literature. Our analysis reveals that, compared to the linear demand, the exponential demand function requires less stringent conditions to achieve coordination when only the retailer is fairness-concerned.
AB - The supply chain literature analyzing supplier-retailer contracts and channel coordination has typically focused on profit or revenue maximization as the members' sole objective. In such settings, it is well known that a simple wholesale price contract is not effective in coordinating the channel due to double marginalization. Recently, Cui et al. [Cui, T.H., Raju, J.S., Zhang, Z.J., 2007. Fairness and channel coordination. Management Science 53 (8) 1303-1314] introduced the members' fairness concerns into channel coordination. Assuming a linear demand function, the authors show that a coordinating wholesale price contract can be designed when only the retailer or both parties are concerned about fairness. In this paper, we extend the authors' results to other nonlinear demand functions that are commonly used in the literature. Our analysis reveals that, compared to the linear demand, the exponential demand function requires less stringent conditions to achieve coordination when only the retailer is fairness-concerned.
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U2 - 10.1016/j.ejor.2010.07.017
DO - 10.1016/j.ejor.2010.07.017
M3 - Article
AN - SCOPUS:77957707806
SN - 0377-2217
VL - 207
SP - 1321
EP - 1326
JO - European Journal of Operational Research
JF - European Journal of Operational Research
IS - 3
ER -