The linear bargaining solution

Dependent Retailers’ Demand in Game Theoretic Model of Supply Chain

“…Thus, the manufacturer can be considered as the leader of the game, and the behavior of retailers is shaped as the best response to the leader's strategy. Therefore, the interaction between the manufacturer and retailers is a Stackelberg game (Pechersky andBelyaeva, 2001, Tirole, 1988). In our paper, we assume that the wholesale price w is fixed, and focus only on searching the Nash equilibrium of the Cournot game between retailers.…”

“…In turn, the retailer relationship can be constructed as a Cournot duopoly (Pechersky andBelyaeva, 2001, Tirole, 1988). The total demand of retailer i, i = 1, 2, consists of local demand δ i and demand switched from another retailer j, j = 3 − i, in the absence of sufficient stock.…”