Influence of Demand Fluctuations and Competition Intensity on Dominant Power Advantages of Supply Chains

HE Zheng; JIANG Xue; FENG Chun

doi:10.3969/j.issn.1007-7375.2023.06.004

Abstract：For a supply chain consisting of multiple suppliers and retailers,this paper utilizes Cournot-Stackelberg,Market-Stackelberg and Market-Nash game models to simulate the situation where the market dominant power of upstream sellers gradually decreases while the power of downstream buyers increases.The equilibrium decisions and supply chain performance are compared and analyzed under three modes,as well as their responses to external market changes such as demand fluctuations and market competition intensity.Results show as follows.1)In a seller-dominated supply chain,the increase in buyer power reduces market equilibrium production and wholesale prices.2)With strong demand fluctuations,a balance of upstream and downstream power can achieve more stable equilibrium production and wholesale prices.3)When market demand fluctuations are small,dominant power of a supply chain brings a higher profit level,and participants can actively compete for the power;however,when demand fluctuates greatly,the profit advantage brought by market dominance is not significant,and there is no need to spend a lot of cost for market dominance.4)The fierce competition of upstream suppliers induces them to give up competing for market dominance in a supply chain,but it has little effect on downstream retailers to strive for market dominant power.However,the fierce horizontal competition downstream stimulates both suppliers and retailers to actively compete for market dominant power.5)Intensified market competition improves the total profit of a supply chain,so as to encourage that competition is beneficial to the overall economic development of society.