The Horizontal Fairness Concern of Backup Supplier in a Triadic Supply Chain
28 Pages Posted: 5 Mar 2012
Date Written: March 4, 2012
Abstract
We consider a triadic supply chain, in which a manufacturer can sequentially source from two suppliers: a cheap primary supplier with yield uncertainty risk; and an expensive backup supplier with perfect reliability. After having a contract with the primary supplier, the manufacturer may offer a contract to the backup supplier to mitigate the yield uncertainty of the primary supplier. In such a setting, the backup supplier may have horizontal fairness concerns. We model the contract design problem using a Stackelberg game and characterize optimal decisions for the manufacturer. We provide empirical evidence of horizontal fairness concern from the backup supplier by conducting experiments. Furthermore, the impact of the fairness concern on the supply chain performance is analyzed. The results show that the manufacturer should pay close attention to the fairness concern of the backup supplier, and that the fairness concern does not always benefit the backup supplier.
Suggested Citation: Suggested Citation
Do you have negative results from your research you’d like to share?
Recommended Papers
-
Fairness and Channel Coordination
By Haitao (tony) Cui, Jagmohan S. Raju, ...
-
Peer-Induced Fairness in Games
By Teck Ho and Xuanming Su
-
Reactions to Perceived Inequity in U.S. And Dutch Interorganizational Relationships
By Lisa K. Scheer, Nirmalya Kumar, ...
-
Is Channel Coordination All it is Cracked Up to Be?
By Charles A. Ingene and Mark E. Parry
-
The Benefit of Uniform Price for Branded Variants
By Yuxin Chen and Haitao (tony) Cui
-
Fairness Ideals in Distribution Channels
By Haitao (tony) Cui and Paola Mallucci
-
Fairness in Selling to the Newsvendor
By Xiaole Wu and Julie Niederhoff
-
Effective and Necessary: Individual Supplier Behavior in Revenue Sharing and Wholesale Contracts
By Julie Niederhoff and Panos Kouvelis
-
Outlet Ownership in Franchising Systems: An Agency Based Approach