Annals of Operations Research

, Volume 275, Issue 2, pp 485–510 | Cite as

Decentralization versus coordination in competing supply chains under retailers’ extended warranties

  • Jianhua Ma
  • Xingzheng Ai
  • Wen YangEmail author
  • Yanchun Pan
Original Research


This paper studies a two-tier duopoly competing supply chain system consisting of two manufacturers and two exclusive retailers. Both manufacturers produce differentiated products and both retailers provide extended warranties for the products they sell. Two types of channel-structure strategy options are considered: a decentralized structure with a wholesale price contract and a coordinated structure with a sophisticated contract. We first derive the equilibrium outcomes under three possible chain-to-chain competition scenarios. Subsequently, we reveal how manufacturers control their retail channels to gain more supply chain system profit under an interactive environment with supply chain competition and retailers’ extended warranties. We find that pure coordinated channel competition and pure decentralized channel competition may both reach equilibrium. Furthermore, the interaction forces of supply chain competition and extended warranty service significantly impact the characteristics of the equilibria. Finally, we analyze the competing supply chain’s coordination contract design by using the example of a two-part tariff contract, and determine the feasible contract parameter range that results in a win-win solution for supply chain members.


Supply chain competition Extended warranty Channel structure Coordination 



The authors gratefully acknowledge the editor and two anonymous referees for their helpful comments and suggestions which significantly improve the quality of the paper. This research is supported by the National Natural Science Foundation of China (Grant Nos. 71402101, 71372140, 71402102, 71472126, 71432003, 71572114, and 71531003).


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Copyright information

© Springer Science+Business Media, LLC, part of Springer Nature 2018

Authors and Affiliations

  1. 1.College of ManagementShenzhen UniversityShenzhenChina
  2. 2.School of Economics and ManagementUniversity of Electronic Science and Technology of ChinaChengduChina

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