Coordination and First-mover Advantage of Three-echelon Supply Chain

Abstract

The asynchronous actions of the supply chain members are consistent with practice of supply chain operation. It is important to consider such behaviors in supply chain, especially in a multi-echelon supply chain. But it has great difficulties to identify the intermediate member’s first-mover advantage of the multi-echelon supply chain, and there are quite few studies in literature. Hence this paper focuses on the members’ first-mover advantage in the three-echelon supply chain with a Stackelberg game. It also analyzes coordination of the three-echelon supply chain. Three main results are as follows: first, the revenue-sharing contract can coordinate the three-echelon supply chain in the sense of either Nash equilibrium or Stackelberg equilibrium; second, the retailer’s profit and the total profit of the three-echelon supply chain in Stackelberg equilibrium are worse than that of the three-echelon supply chain in Nash equilibrium; in the end, the retailer has no first-mover advantage, while the manufacturer has first-mover advantage and the distributor has that advantage under some conditions.