Technical Note-Local Bargaining and Supply Chain Instability

• 成果类型: Article
• 署名作者: Thanh Nguyen
• 署名单位: Purdue University System; Purdue University
• 刊物名称: OPERATIONS RESEARCH
• ISSN/ISSBN: 0030-364X
• DOI: 10.1287/opre.2017.1605
• 发表日期: 2017
• 页码: 1535-1545

摘要

We analyze the behavior of a competitive n-tier supply chain system, where agents bargain with each other locally. We study the influence of transaction costs on the convergence of the system to a stationary outcome. In particular, we consider a dynamic bargaining game among a finite set of agents and its replications, and use a limit stationary equilibrium to examine the system's behavior as the population's size goes to infinity. The convergence of the system to a limit stationary equilibrium would capture the common belief that as the market gets large, it converges to a competitive and stable outcome. However, we prove that depending on the underlying transaction costs, the system might not converge to such an equilibrium. Interestingly, our result shows that a small increase in the transaction cost at one end of the chain can be greatly amplified and shifts the system away from the steady state. When a limit stationary equilibrium exists, we show that it is unique. We use such an equilibrium outcome to study trade surplus among sellers, buyers, and middlemen.