Investing in a Shared Supplier in a Competitive Market: Stochastic Capacity Case

• 成果类型: Article
• 署名作者: Qi, Anyan; Ahn, Hyun-Soo; Sinha, Amitabh
• 署名单位: University of Texas System; University of Texas Dallas; University of Michigan System; University of Michigan
• 刊物名称: PRODUCTION AND OPERATIONS MANAGEMENT
• ISSN/ISSBN: 1059-1478
• DOI: 10.1111/poms.12348
• 发表日期: 2015
• 页码: 1537-1551
• 关键词: capacity investment; supplier development; Cournot competition; Non-cooperative game

摘要

When firms invest in a shared supplier, one key concern is whether the invested capacity will be used for a competitor. In practice, this concern is addressed by restricting the use of the capacity. We consider what happens when two competing firms invest in a shared supplier. We consider two scenarios that differ in how capacity is used: exclusive capacity and first-priority capacity. We model firms' investment and production decisions, and analyze the equilibrium outcomes in terms of the number of investing firms and capacity levels for each scenario; realized capacity is a stochastic function of investment levels. We also identify conditions under which the spillover effect occurs, where one firm taps into the other firm's invested capacity. Although the spillover supposedly intensifies competition, it actually discourages firms' investment. We also characterize the firms' and supplier's preference about the capacity type. While the non-investing firm always prefers spillovers from the first-priority capacity, the investing firm does not always want to shut off the other firm's access to its leftover capacity, especially when allowing spillover induces the other firm not to invest. The supplier's preference depends on the trade-off between over-investment and flexibility.