The role of fairness in competitive supply chain relationships: An experimental studyAuthor-Name: Choi, Sungchul

Paul R. Messinger

European Journal of Operational Research, 2016, vol. 251, issue 3, 798-813

Abstract: This paper examines whether the conclusions of standard supply-chain models carry over to repeated supply-chain relationships. The past models assume profit-maximizing agents in one-shot games. In these games, an essential unresolved issue concerns which parties in the supply chain have greater power to extract a larger share of supply chain profit: the manufacturer or the retailer. In particular, we consider a two-manufacturer/one-retailer supply chain over repeated periods of interaction. We find that the experimental results are closest to a symmetric outcomes hypothesis: the supply chain members tend to choose similar margin levels and profits tend to be more fairly divided than non-cooperative, game-theoretic, supply-chain models predict. Individual supply chain member's behavior shows evidence of fairness concerns for supply chain members. These results indicate the significant role of fairness in competitive supply chain relationships, even in a scenario that is designed to favor one supply chain member over the others.

Keywords: Supply chain management; Fairness; Competitive supply chain; Wholesale-price contract; Behavioral operations (search for similar items in EconPapers)
Date: 2016
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Citations: View citations in EconPapers (24)

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Persistent link: https://EconPapers.repec.org/RePEc:eee:ejores:v:251:y:2016:i:3:p:798-813

DOI: 10.1016/j.ejor.2015.12.001

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