Profit Seeking vs. Survival Seeking: An Analytical Study of Supplier's Behavior and Buyer's Subsidy Strategy

• 成果类型: Article
• 署名作者: Wei, Mike Mingcheng; Yao, Tao; Jiang, Bin; Young, Scott T.
• 署名单位: Washington University (WUSTL); Pennsylvania Commonwealth System of Higher Education (PCSHE); Pennsylvania State University; Pennsylvania State University - University Park; DePaul University
• 刊物名称: PRODUCTION AND OPERATIONS MANAGEMENT
• ISSN/ISSBN: 1059-1478
• DOI: 10.1111/j.1937-5956.2011.01309.x
• 发表日期: 2013
• 页码: 269-282
• 关键词: supplier competition; buyer subsidy; survival-seeking strategy; profit-seeking strategy; game theory

摘要

Supplier default is common in emerging markets. Suppliers under the threat of default have different objectives from profit-seeking companies. This paper analytically tests how profit-seeking or survival-seeking behavior, single-period or two-period consideration, and buyer's subsidy influence the supplier's and buyer's final utilities. The results show that under single-period consideration, the supplier's survival-seeking strategy in fact drives more start-ups or small suppliers out of business when the competition becomes severe; under two-period consideration, no matter which strategy (profit-seeking or survival-seeking) the supplier selects, the second-period price and profit are always higher than those of the first period. Furthermore, we find that providing subsidy is an effective way for buyer to keep suppliers' competition at a certain level on the behalf of buyer's interest. By numerically estimating the benefits associated with the cost of subsidy, we provide a basis for understanding the costbenefit analysis of buyer's subsidy strategy.