Nanjing University of Science & Technology
A two-level supply chain is studied which includes a risk-neutral incumbent manufacturer, a risk-averse external manufacturer and a risk-neutral retailer. Supply chain models under different encroachment strategies based on Stackelberg game theory, are established to explore the encroachment strategy of the risk-averse external manufacturer, and analysis the impact of encroachment and risk aversion on the equilibrium decision of supply chain members. The results show that when the external manufacturer sells products through the retailer, it hurts the profit of the incumbent manufacturer, but it benefits the retailer. Pareto improvement areas exist when the external manufacturer sells products directly through online channels. With the increase of the degree of risk aversion of external manufacturer, the price war has become increasingly fierce, which is disadvantageous to itself, incumbent manufacturer and retailer. The encroachment strategy of external manufacturer is affected by the combination of quality differences, risk aversion, production costs and selling cost. When the external manufacturer selects the optimal encroachment strategy, it hurts the profit of the incumbent manufacturer and the supply chain system can’t achieve Pareto improvement.