Equilibrium evolution in a two-echelon supply chain with financially constrained retailers: The impact of equity financing

Yang, Huijie; Zhuo, Wenyan; Shao, Lusheng

doi:10.1016/j.ijpe.2016.12.027

Cited by 91 publications

(49 citation statements)

References 33 publications

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“…Our study differs from that of Yang et al. () in that we examine a different supply chain structure, that is, characterized by co‐opetition and dual channel.…”

Section: Literature Reviewmentioning

confidence: 88%

“…This branch of literature aims to provide a rationale for trade credit from various perspectives (Li et al., ; Peura et al., ; Tang et al., ; Xiao et al., ; Zhang et al., ; Wu et al., ). Several papers point out that trade credit has the advantage of risk sharing and consequently mitigating double marginalization compared with bank loan (Jing et al., ; Kouvelis and Zhao, ; Cai et al., ; Jing and Seidmann, ; Yang et al., ; Tang et al., ; Yang et al., ; Jin et al., ; Yang and Birge, ). A number of studies reveal that trade credit could be used to coordinate the capital‐constrained supply chain (Lee and Rhee, , ; Xiao et al., ).…”

Section: Literature Reviewmentioning

confidence: 99%

“…Thus far, the literature reveals that only Yang et al. () considered equity financing in a competitive supply chain that consists of a supplier and two capital‐constrained retailers. Our study differs from that of Yang et al.…”

Section: Literature Reviewmentioning

confidence: 99%

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Financing strategies for a capital‐constrained manufacturer in a dual‐channel supply chain

Xiao

2019

Int Trans Operational Res

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This study investigates a co-opetition-type dual-channel supply chain that consists of a competitive supplier (CS) and a capital-constrained manufacturer (CCM). The CCM procures key components from and simultaneously competes with the CS in the consumer market. To address the CCM's capital constraint, we consider three financing strategies, namely, trade credit, bank loan, and hybrid financing (i.e., combined use of bank loan and equity financing). Game models are established to characterize the interactions between the CS and CCM. The corresponding equilibria are derived under each strategy. Then, comparative analyses are conducted, and the CS's and CCM's preference structures regarding the three strategies are revealed. On this basis, the equilibrium strategy can be concluded as either trade credit or hybrid financing, but never bank loan. Specifically, when the equity financing ratio is small or large, trade credit is an equilibrium strategy. When the equity financing ratio is medium, the equilibrium strategy between trade credit and hybrid financing is determined by consumers' product preference and loan interest rate.accounted for a combined shipping volume of over 533 million units in 2017. This value is equivalent to 36.3% of the global smartphone market. 2 Although the two companies are in fierce competition in their industry, they cooperate with each other in many areas. 3 Notably, Samsung has provided Apple with processors and OLED screens for many years. 4 Such "co-opetition" is prevalent in many high-technology industries. Other typical examples are IBM and Cisco. The former purchases network equipment from the latter, while simultaneously competing in the overall server market. 5 The dual-channel supply chain, in which a supplier provides a manufacturer with key components while the two companies compete with each other in the final market, is common in real businesses. However, in practice, certain manufacturers in such dual-channel supply chains may lack capital to support production. For example, the smartphone screens used by Gionee, a well-known smartphone manufacturer in China, have always been provided by Foxconn. However, in recent years, Gionee has encountered capital-shortage problems and sought financing instruments to support its production. Consequently, one of the critical challenges for Gionee is selecting a suitable financing strategy.Accordingly, we extend the current literature by examining a co-opetition-type dual-channel supply chain, which consists of a competitive supplier (CS) and a capital-constrained manufacturer (CCM). The two firms are cooperative in component supply but competitive in the consumer market. Specifically, the CCM procures components from the CS. Meanwhile, the two companies compete by selling substitutable products in the same consumer market. For the capital constraint of the CCM, we consider three financing strategies. In Strategy 1 (trade credit), the CS offers trade credit to the CCM. In Strategy 2 (bank loan), the CCM seeks a bank loan to support its ...

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“…Our study differs from that of Yang et al. () in that we examine a different supply chain structure, that is, characterized by co‐opetition and dual channel.…”

Section: Literature Reviewmentioning

confidence: 88%

Section: Literature Reviewmentioning

confidence: 99%

See 1 more Smart Citation

Financing strategies for a capital‐constrained manufacturer in a dual‐channel supply chain

Xiao

2019

Int Trans Operational Res

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“…Generally speaking, most literature focuses on the comparison between internal financing and external financing. Some literature points out that trade credit has more advantages than bank loans, as trade credit can alleviate double marginalization (Tang et al [22]; Yang et al [33]; Yang and Birge [34]). Kouvelis and Zhao [12] showed that trade credit is one of the important short-term financing sources among enterprises.…”

Section: (Communicated By Ada Che)mentioning

confidence: 99%

Coordination contracts for a dual-channel supply chain under capital constraints

Zhang¹,

Wang²,

Liu³

et al. 2021

Journal of Industrial &Amp; Management Optimization

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Manufacturers often face capital constraints when opening up online channel, at this time external financing and internal financing are usually considered. Previous literature has shown that internal financing, turns out to be a better option. To figure out how trade credit financing discount contract affects operations and performances of supply chain, this paper studies the pricing decision of a retailer-dominant dual-channel supply chain with manufacturer's capital constraints. The Stackelberg game models under centralized decision and decentralized decision are constructed. Moreover, this paper conducts research about the effects of revenue-sharing (RS) contract, direct channel price discount (DP) contract and retail channel price discount (RP) contract on the performance of supply chain. Numerical examples are provided to explore the comparison of the optimal pricing strategies and total profits under different contracts. The results show that the retailer prefers RS and DP contracts to RP contract. Among them, RS contract has a broader scope of coordination, while DP contract can achieve a higher profit. The results can serve as insights for decision-makers to choose the most appropriate financial discount contract.

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“…To improve supply chain performance, the dominant party with full capital offers trade credit to the capital-constrained party. More recently, trade credit has been widely employed as a short-term financing source to address capital constraints in supply chains (e.g., see [4,11,16,20,33,35]). Goyal [10] initially develops an EOQ model with the permissible delay in payment.…”

Section: Introductionmentioning

confidence: 99%

Advertising and Pricing Policies in a Two-Echelon Supply Chain with a Capital-Constrained Retailer

2019

Self Cite

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We consider a two-echelon supply chain consisting of one supplier and one capitalconstrained retailer. The supplier can offer the retailer trade credit to fund his orders. To boost sales, the retailer invests part or all of initial capital exclusively in advertising at the beginning of the sales season. Demand is sensitive to both retail price and advertising expenses of the retailer. With a wholesale price contract, we analytically derive the Stackelberg equilibrium with respect to pricing by both parties and advertising by the retailer. Our results show that the retailer with less initial capital prefers to invest full initial capital in advertising irrespective of the advertising elasticity or the interest rate charged by the supplier. The retailer with more initial capital only invests part of initial capital in advertising. The retailer's advertising policy under different initial capital levels always benefits the supply chain and the supplier. We further identify the effects of the advertising elasticity and the interest rate on the pricing policies. Numerical simulations and sensitivity analysis are given to elaborate our theoretical results.Mathematics Subject Classification. 90B60.

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Equilibrium evolution in a two-echelon supply chain with financially constrained retailers: The impact of equity financing

Cited by 91 publications

References 33 publications

Financing strategies for a capital‐constrained manufacturer in a dual‐channel supply chain

Financing strategies for a capital‐constrained manufacturer in a dual‐channel supply chain

Coordination contracts for a dual-channel supply chain under capital constraints

Advertising and Pricing Policies in a Two-Echelon Supply Chain with a Capital-Constrained Retailer

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