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Determination of the effect of product substitutability on sales performance of integrated and decentralised supply chains htrough nash equilibria

Wang, W.R., Zhao, S.L., Song, W., Cacciolatti, Luca, Zhang, X.Y., Sausman, C., Fu, Yelin (2014) Determination of the effect of product substitutability on sales performance of integrated and decentralised supply chains htrough nash equilibria. International Journal of Productivity and Performance Management, 63 (7). pp. 863-878. ISSN 1741-0401. (doi:10.1108/IJPPM-10-2012-0112) (The full text of this publication is not currently available from this repository. You may be able to access a copy if URLs are provided)

The full text of this publication is not currently available from this repository. You may be able to access a copy if URLs are provided. (Contact us about this Publication)
Official URL
http://dx.doi.org/10.1108/IJPPM-10-2012-0112

Abstract

Purpose – The purpose of this paper is to investigate the effects of product substitutability on sales performance of integrated and decentralised supply chains. The authors model supply chain performance effects by applying a Cournot equation to a combination of different industry configurations. The study aims to extend existing equilibria models in different supply chains by including the effects of product substitutability on supply chain performance. By extending existing equilibria models, the authors explore the relationship between the degree of product substitutability, chain structure and chain performance when some actors of the supply chain behave as Stackelberg leaders in a duopoly. Design/methodology/approach – The paper models a supply chain performance by applying a Cournot equation to different supply chain structures in a duopoly. Findings – The findings indicate that, for each specific-supply chain structures in different market configurations, when product substitutability reaches a certain threshold decentralised supply chains outperform integrated chains, in disagreement with common belief in current existing literature. Research limitations/implications – The study is limited to the application of differential equations in a competitive market configured as a duopoly. Future studies might extend the same model to a competitive market characterised by more than two actors. The findings imply that current tendency of lean implementations through integrated supply chains does not always favour supply chain performance. Practical implications – The paper includes implications for the development of a stronger differentiation strategy based on consumer value when markets are characterised by high-product substitutability. Originality/value – These findings highlight the importance of differentiation and consumer-value generation in markets that follow Nash equilibria as opposed to the current focus on price competition.

Item Type: Article
DOI/Identification number: 10.1108/IJPPM-10-2012-0112
Uncontrolled keywords: Supply chain management, Game theory, Stackelberg, Cournot equilibrium, Integrated supply chains, Nash equilibrium
Subjects: H Social Sciences > H Social Sciences (General)
Divisions: Faculties > Social Sciences > Kent Business School > Marketing
Depositing User: Tracey Pemble
Date Deposited: 11 Feb 2014 15:39 UTC
Last Modified: 29 May 2019 11:50 UTC
Resource URI: https://kar.kent.ac.uk/id/eprint/38217 (The current URI for this page, for reference purposes)
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