Dependent Retailers’ Demand in Game Theoretic Model of Supply Chain

Abstract

Supply chain management is one of the intensively developing areas of applied research. One of the main tools for studying the problems of this area is game theory. This study is based on a two-level supply chain model mathematically described using a hierarchical Stackelberg game. The top player in the hierarchy is the manufacturer and the bottom players are two retailers interacting according to the Cournot game scheme. Unlike previous models, this one assumes that their demands are dependent and jointly distributed. Next, the focus shifts to the study of the interaction pattern of retailers when trading substitute goods. A special case of joint distribution of demand is considered.