Trade Credit with Barter in a Capital-Constrained Supply Chain

Yangyang Huang, Zhenyang Pi and Weiguo Fang
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Yangyang Huang: School of Economics and Management, Beihang University, Beijing 100191, China
Zhenyang Pi: School of Economics and Management, Beihang University, Beijing 100191, China
Weiguo Fang: School of Economics and Management, Beihang University, Beijing 100191, China

Sustainability, 2021, vol. 13, issue 20, 1-15

Abstract: Barter has emerged to alleviate capital pressure, maximize the circulation of goods, and facilitate the disposal of excess inventory. This study considers a two-level supply chain consisting of a manufacturer and a capital-constrained retailer with trade credit, in which the retailer exchanges unsold products for needed subsidiary products on a barter platform. The retailer’s optimal order quantity and the manufacturer’s wholesale price are derived, and the influences of barter and other factors on the equilibrium strategy and performance of the supply chain are examined; these results are verified and supplemented by numerical simulation. We find that the retailer can increase profit by bartering when facing highly uncertain demand, that the retailer’s optimal order quantity increases with the supply rate and demand for subsidiary products, and that both manufacturer and retailer benefit from the high supply rate of subsidiary products. However, barter induces the manufacturer to raise the wholesale price to prevent its profit from being harmed. In addition, the manufacturer suffers from the retailer’s initial capital.

Keywords: trade credit; barter; equilibrium strategy; capital constraint (search for similar items in EconPapers)
JEL-codes: O13 Q Q0 Q2 Q3 Q5 Q56 (search for similar items in EconPapers)
Date: 2021
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (2)

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