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Effects of risk attitudes and investment spillover on supplier encroachment

  • Huiru Chen
  • Yingchen YanEmail author
  • Nana Ma
  • Jie Liu
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Abstract

With the development of e-commerce, a growing number of suppliers have begun to initially establish their own direct channels, competing with their retail channels. However, while this encroachment endows the suppliers with an efficient method to control downstream competition and total production output directly, it may hurt the retailer due to the loss of monopoly in the retail market. This inconsistency presents a difficulty in reaching equilibrium. In this paper, we focus on the combined effects of the risk attitudes and upstream production investment of supply chain members on supplier encroachment and verify the existence of “win–win” results for both supplier and retailer. We find that, while the two parties cannot simultaneously benefit from supplier encroachment in the absence of upstream investment, they can obtain a Pareto improvement from it in the presence of upstream investment and spillover effect. Regarding risk attitudes, we find that both the supplier and the retailer can reach agreement on the supplier encroachment in the case of a moderate confidence level. In other words, the not too risk-loving and not too risk-averse supply chain members are more likely to obtain a Pareto improvement.

Keywords

Encroachment Investments Spillover effects Confidence level Uncertainty environment 

Notes

Acknowledgements

This work is supported by the National Natural Science Foundation of China under Grant No. 71771165 and 61873108, the Key Project of Humanities and Social Sciences in Hubei Education Department under Grant No. 18D101, the High Level Training Project of Huanggang Normal University under Grant No. 201816803, and Yanta Scholars Foundation of Xi’an University of Finance and Economics.

Compliance with ethical standards

Conflict of interest

The authors declare that they have no conflict of interest.

Ethical approval

This article does not contain any studies with human or animal participants performed by any of the authors.

Informed consent

Informed consent is obtained from all individual participants included in the study.

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Copyright information

© Springer-Verlag GmbH Germany, part of Springer Nature 2018

Authors and Affiliations

  1. 1.College of Mathematics and StatisticsHuanggang Normal UniversityHubeiChina
  2. 2.College of Management and EconomicsTianjin UniversityTianjinChina
  3. 3.School of StatisticsXi’an University of Finance and EconomicsShaanxiChina

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