Trading reserved capacity independently among supply chains

We propose a novel mechanism for pooling the reserved capacity (super capacity) of different supply chains, so that they can more effectively match their single‐period inventory supplies with their demands. Through this mechanism, retailers can buy or sell unutilized super capacity independently as a commodity in a sub‐industry before and during the selling season, which helps improve supply flexibility and increase the utilization of suppliers' reserved capacity. Our findings provide a new channel coordination strategy for a group of supply chains to hedge against capacity and inventory risks by trading super capacity with their competitors, which yields individual and aggregate benefits.