Advertisement

Wholesale Pricing and Evolutionarily Stable Strategy in Duopoly Supply Chains with Social Responsibility

  • Caichun Chai
  • Tiaojun XiaoEmail author
Article
First Online:
  • 43 Downloads

Abstract

This paper analyzes manufacturers’ wholesale price decisions and the evolutionarily stable strategies of the retailers’ marketing behavior in duopoly supply chains, where each chain consists of one manufacturer and many retailers. Each retailer chooses one of two marketing strategies: social responsibility or non-social responsibility (i.e., a firm only cares about the benefits of its shareholders). We identify the conditions under which a strategy profile is evolutionarily stable. Furthermore, we investigate the manufacturers’ wholesale prices and find the following: (i) the retailer’s social responsibility decreases the unit wholesale price; (ii) when the degree of the retailer’s social responsibility is medium, the social responsibility of the retailer in a supply chain increases the profit of the retailer’s own manufacturer and decreases the profit of the rival’s manufacturer; otherwise, it decreases the profits of the two manufacturers; and (iii) when each retailer exhibits its social responsibility moderately, a triple-win situation can be achieved.

Keywords

Evolutionarily stable strategy replicator dynamics social responsibility supply chain management 
This is a preview of subscription content, log in to check access.

Preview

Unable to display preview. Download preview PDF.

Unable to display preview. Download preview PDF.

References

  1. Allen F, Carletti E, Marquez R (2014). Stakeholder governance, competition and firm value. CESifo Working pape (No. 4652).zbMATHGoogle Scholar
  2. Andersen M, Skjoett–Larsen T (2009). Corporate social responsibility in global supply chains. Supply Chain Management: An International Journal 14(2): 75–86.Google Scholar
  3. Boyaci T, Gallego G (2002). Coordinating pricing and inventory replenishment policies for one wholesaler and one or more geographically dispersed retailers. International Journal of Production Economics 77(2): 95–111.Google Scholar
  4. Cadbury A (2006). Corporate social responsibility. Twenty–First Century Society: Journal of the Academy of Social Sciences 1(1): 5–21.Google Scholar
  5. Cespa G, Cestone G (2007). Corporate social responsibility and managerial entrenchment. Journal of Economics and Management Strategy 16(3): 741–771.Google Scholar
  6. Chai C, Xiao T, Francis E (2018). Is social responsibility for firms competing on quantity evolutionary stable? Journal of Industrial and Management Optimization 14(1): 325–347.MathSciNetGoogle Scholar
  7. Cheng B, Loannou L, Serafeim G (2014). Corporate social responsibility and access to finance. Strategic Management 35(1): 1–23.Google Scholar
  8. Chiang T, Che Z, Wang T (2011). A design for environment methodology for evaluation and improvement of derivative consumer electronic product development. Journal of Systems Science and Systems Engineering 20(3): 260–274.Google Scholar
  9. Cornell B, Shapiro C (1987). Corporate stakeholders and corporate finance. Financial Management 16(1): 5–14.Google Scholar
  10. Cressman R (1992). The Stability Concept of Evolutionary Game Theory (Springer–Verlag, Berlin, Heidelberg).zbMATHGoogle Scholar
  11. Cruz J (2008). Dynamics of supply chain networks with corporate social responsibility through integrated environmental decision–making. European Journal of Operational Research 184(3): 1005–1031.MathSciNetzbMATHGoogle Scholar
  12. Cruz J (2009). The impact of corporate social responsibility in supply chain management: Multicriteria decisionmaking approach. Decision Support Systems 48(1): 224–236.Google Scholar
  13. Cruz J (2013). Mitigating global supply chain risks through corporate social responsibility. International Journal of Production Research 51(13): 3995–4010.Google Scholar
  14. Dahlsrud A (2008). How corporate social responsibility is defined: An analysis of 37 definitions. Corporate Social Responsibility and Environmental Management 15: 1–13.Google Scholar
  15. Eriksson D, Sevensson G (2015). Elements affecting social responsibility in supply chains. Supply Chain Management: An International Journal 20(5): 561–566.Google Scholar
  16. Fortune (2013). Top 100 social responsibility firms in China (in Chinese). Fortune March.Google Scholar
  17. Friedman D (1991). Evolutionary games in economics. Econometrica 59(3): 637–666.MathSciNetzbMATHGoogle Scholar
  18. Gallear D, Ghobadian A, Chen W (2012). Corporate responsibility, supply chain partnership and perfor mance: An empirical examination. International Journal of Production Economics 140(1): 83–91.Google Scholar
  19. Goering GE (2012). Corporate social responsibility and marketing channel coordination. Research in Economics 66(2): 142–148.Google Scholar
  20. Hofbauer J, Sigmund K (1988). Evolutionary Games and Population Dynamics (Cambridge University Press, Cambridge).Google Scholar
  21. Jensen M, Meckling W (1976). Theory of the firm: Managerial behavior, agency costs and ownership structure. Journal of Financial Economics 3(4): 305–360.Google Scholar
  22. Lee MDP (2008). A review of the theories of corporate social responsibility: Its evolutionary path and the road ahead. International Journal of Management Reviews 10(1): 53–73.Google Scholar
  23. Levy J (2009). A case for sustainable security systems engineering: Integrating national, human, energy and environmental security. Journal of Systems Science and Systems Engineering 18(4): 385–402.Google Scholar
  24. Magill M, Quinzii M, Rochet J (2015). Atheory of the stakeholder corporation. Econometrica 83(5): 1685–1725.MathSciNetGoogle Scholar
  25. Maloni M, Brown M (2006). Corporate social responsibility in the supply chain: Anapplication in the food industry. Journal of Business Ethics 68(1): 35–52.Google Scholar
  26. Mankiw N (2014). Essentials of Economics (6ed),Higher Education Press.Google Scholar
  27. Margolis J, Walsh J (2003). Misery loves companies: Rethinking social initiatives by business. Administrative Science Quarterly 48(2): 268–305.Google Scholar
  28. McWilliams A, Siegel D, Wright P (2006). Corporate social responsibility: Strategic implications. Journal of Management Studies 43(1): 1–18.Google Scholar
  29. Meredith R (1999). The newest ford generation takes the company spotlight. New York Times 14 May: C6.Google Scholar
  30. Omran M, Atrill P, Pointon J (2002). Shareholders versus stakeholders: Corporate mission statements and investor returns. Business Ethics: A European Review 11(4): 318–328.Google Scholar
  31. Panda S (2014). Coordination of a socially responsible supply chain using revenue sharing contract. Transportation Research Part E 67: 92–104.Google Scholar
  32. Roca C, Cuesta J, Sánchez A (2009). Evolutionary game theory: Temporal and spatial effects beyond replicator dynamics. Physics of Life Reviews 6(4): 208–249.Google Scholar
  33. Saeidi S, Sofian S, Saeidi P, Saeidi S, Saaeidi S (2015). How does corporate social responsibility contribute to firm financial performance? the mediating role of competitive advantage, reputation, and customer satisfaction. Journal of Business Research 68(2): 341–350.Google Scholar
  34. Servaes H, Tamayo A (2013). The impact of corporate social responsibility on firm value: The role of customer awareness. Management Science 59(5): 1045–1061.Google Scholar
  35. TateW, EllramL, Kirchoff J (2010). Corporate social responsibility reports: A thematic analysis related to supply chain management. Journal of Supply Chain Management 46(1): 19–44.Google Scholar
  36. Taylor P, Jonker L (1987). Evolutionary stable strategies and game dynamics. Mathematical Biosciences 40(1–2): 145–156.zbMATHGoogle Scholar
  37. Weibull JW (1995). Evolutionary Games Theory (The MIT Press, Cambridge, Massachusetts, London, England).zbMATHGoogle Scholar
  38. Welford R, Frost S (2006). Corporate social responsibility in asian supply chains. Corporate Social Responsibility and Environmental Management 13(3): 166–176.Google Scholar
  39. Xiao T, Yu G (2006). Supply chain disruption management and evolutionarily stable strategies of retailers in the quantity–setting duopoly situation with homogeneous goods. European Journal of Operational Research 173(2): 648–668.MathSciNetzbMATHGoogle Scholar
  40. Yoshimori M (1995). Whose company is it? the concept of the corporation in Japan and the West. Long Range Planning 28(4): 2–44.Google Scholar

Copyright information

© Systems Engineering Society of China and Springer-Verlag GmbH Germany, part of Springer Nature 2018

Authors and Affiliations

  1. 1.Institute of Game Behavior and Operations Management, School of Management Science and EngineeringNanjing University of Finance and EconomicsNanjingChina
  2. 2.School of Management and EngineeringNanjing UniversityNanjingChina

Personalised recommendations

Cite article

Buy options