Article ID: | iaor19961207 |
Country: | United Kingdom |
Volume: | 22 |
Issue: | 9 |
Start Page Number: | 947 |
End Page Number: | 958 |
Publication Date: | Nov 1995 |
Journal: | Computers and Operations Research |
Authors: | Li Susan X., Huang Zhimin |
Keywords: | game theory, inventory |
In this paper the authors explore cooperative relationships between two members in a simple buyer-seller system where the buyer is in a monopolistic position. They begin with a situation where the seller, as the leader, has the power to enforce his strategies on the buyer, but vice versa is not true. The authors then extend our analysis to a situation wherein the buyer can also influence the seller’s decisions and address the issue of system cooperation. They illustrate the mutual incentives for cooperation and individual disincentives for cooperation. A quantity discount scheme is developed to implement a profit sharing mechanism for achieving equal division of additional cooperative system profits.