Advanced Search
Article Contents
Article Contents

A game theoretic strategic model for understanding the online-offline competition and fairness concern under community group buying

  • *Corresponding author: Haohao Song

    *Corresponding author: Haohao Song

Our study is supported by National Natural Science Foundation of China (Grant No. 71873064), General Projects of Humanities and Social Sciences of the Ministry of Education (Planning Projects) (Grant No. 18YJA790085), and Social Science Fund Project of Jiangsu Province (Grant No. 21EYB008)

Abstract Full Text(HTML) Figure(6) / Table(1) Related Papers Cited by
  • The continuous growth of e-commerce leads to the emergence of a new supply chain model known as community group buying, which is advantageous to address the inefficiencies and higher costs of intermediate processes. However, its appearance results in fairness concerns for other participating merchants. In this regard, we construct a model with two suppliers, one wholesaler, and two retailers for three different scenarios of the initial status, fairness neutrality, and fairness concern, and comparatively analyze the game equilibria in different scenarios. The results show that the profits of the suppliers and the wholesaler significantly increase after the online retailer enters into the market, whereas the offline retailer's profit has multiple prospects. The online retailer's entry into the marketplace weakens the market position of the offline retailer and significantly erodes its pricing advantage. Additionally, our paper finds that the entry of the online retailer is beneficial for social welfare, and investment conversion efficiency on the platform construction is the core factor for the improvement of social welfare. On the contrary, the influence of fairness concern on social welfare is quite limited and only affects the internal distribution of benefits.

    Mathematics Subject Classification: 91A10, 91B06, 91B16.


    \begin{equation} \\ \end{equation}
  • 加载中
  • Figure 1.  Traditional supply chain operation model

    Figure 2.  Online-offline chain operation model

    Figure 3.  Relationships between equilibrium outcomes and $ \eta $

    Figure 4.  Relationship between equilibrium outcomes and $ \eta $, $ \lambda $

    Figure 5.  Relationship between each participant's profit and $ \eta $, $ \lambda $

    Figure 6.  Relationship between social welfare and $ \eta $, $ \lambda $

    Table 1.  Description of different parameters

    Parameters Descriptions
    $S_i$ Supplier
    $W$ Wholesaler
    $R_i$ Retailer
    $C$ Comsumer
    $D_i$ Demand of the products
    $SW$ Social welfare
    $\alpha$ Maximum capacity of the products
    $\beta$ Price parameter
    $\gamma$ Substitution parameter
    $\omega_i$ Unit wholesale price sold by the supplier to the wholesaler
    $x$ wholesaler's unit markup
    $y$ retailer's unit markup
    $t$ discount of the online retailer
    $\lambda$ parameter of fairness concern
    $\eta$ parameter of investment efficiency
    $*, **$ Superscripts of fairness neutral and fairness concerned
    $\pi$ Profits of the suppliers, the wholesaler, and the retailers
     | Show Table
    DownLoad: CSV
  • [1] Q. AnH. ChenB. XiongJ. Wu and L. Liang, Target intermediate products setting in a two-stage system with fairness concern, Omega-International Journal of Management Science, 73 (2017), 49-59.  doi: 10.1016/j.omega.2016.12.005.
    [2] G. E. Bolton and A. Ockenfels, ERC: A theory of equality, reciprocity and competition, The American Economic Review, 90 (2000), 166-193.  doi: 10.1257/aer.90.1.166.
    [3] J. ChenL. LiangD.-Q. Yao and S. Sun, Price and quality decisions in dual-channel supply chains, European Journal of Operational Research, 259 (2017), 935-948.  doi: 10.1016/j.ejor.2016.11.016.
    [4] J. ChenY.-W. Zhou and Y. Zhong, A pricing/ordering model for a dyadic supply chain with buyback guarantee financing and fairness concerns, International Journal of Production Research, 55 (2017), 5287-5304.  doi: 10.1080/00207543.2017.1308571.
    [5] X. Chen, H. Zhang, M. Zhang and J. Chen, Optimal decisions in a retailer Stackelberg supply chain, International Journal of Production Economics, 187 (2017), 260–270. doi: doi: 10.1016/j.ijpe.2017.03.002.
    [6] Z. Chen and S.-I. I. Su, Social welfare maximization with the least subsidy: Photovoltaic supply chain equilibrium and coordination with fairness concern, Renewable Energy, 132 (2019), 1332-1347.  doi: 10.1016/j.renene.2018.09.026.
    [7] T. H. CuiJ. S. Raju and Z. J. Zhang, Fairness and channel coordination, Management Science, 53 (2007), 1303-1314.  doi: 10.1287/mnsc.1060.0697.
    [8] S. K. Das and S. K. Roy, Effect of variable carbon emission in a multi-objective transportation-p-facility location problem under neutrosophic environment, Computers & Industrial Engineering, 132 (2019), 311-324.  doi: 10.1016/j.cie.2019.04.037.
    [9] S. K. DasS. K. Roy and G. W. Weber, Heuristic approaches for solid transportation-p-facility location problem, Central European Journal of Operations Research, 28 (2020), 939-961.  doi: 10.1007/s10100-019-00610-7.
    [10] S. K. DasS. K. Roy and G. W. Weber, An exact and a heuristic approach for the transportation-p-facility location problem, Computational Management Science, 17 (2020), 389-407.  doi: 10.1007/s10287-020-00363-8.
    [11] S. K. Das, M. Pervin, S. K. Roy and G. W. Weber, Multi-objective solid transportation-location problem with variable carbon emission in inventory management: A hybrid approach, Annals of Operations Research, (2021). doi: 10.1007/s10479-020-03809-z.
    [12] X.-F. Ding and F.-F. Wei, Pricing decisions for manufacturer-driven closed-loop supply chain with fairness concerns, Industrial Engineering Journal, 17 (2014), 78-84.  doi: 10.3969/j.issn.1007-7375.2014.04.013.
    [13] E. Fehr and K. M. Schm idt, A theory of fairness, competition and cooperation, Quarterly Journal of Economics, 114 (1999), 817-868.  doi: 10.1162/003355399556151.
    [14] A. GoliE. Babaee Tirkolaee and N. S. Aydin, Fuzzy integrated cell formation and production scheduling considering automated guided vehicles and human factors, IEEE Transactions on Fuzzy Systems, 29 (2021), 3686-3695.  doi: 10.1109/TFUZZ.2021.3053838.
    [15] A. GoliH. Khademi-ZareR. Tavakkoli-MoghaddamA. SadeghiehM. Sasanian and R. Malekalipour Kordestanizadeh, An integrated approach based on artificial intelligence and novel meta-heuristic algorithms to predict demand for dairy products: A case study, Network-Computation in Neural Systems, 32 (2021), 1-35.  doi: 10.1080/0954898x.2020.1849841.
    [16] A. Goli and B. Malmir, A covering tour approach for disaster relief locating and routing with Fuzzy demand, International Journal of Intelligent Transportation Systems Research, 18 (2020), 140-152.  doi: 10.1007/s13177-019-00185-2.
    [17] A. Goli and H. K. Zare, A comprehensive model of demand prediction based on hybrid artificial intelligence and metaheuristic algorithms: A case study in dairy industry, Journal of Industrial and Systems Engineering, 11 (2018), 190-203. 
    [18] A. GoliH. K. ZareR. Tavakkoli-Moghaddam and A. Sadeghieh, Application of robust optimization for a product portfolio problem using an invasive weed optimization algorithm, Numerical Algebra, Control and Optimization, 9 (2019), 187-209.  doi: 10.3934/naco.2019014.
    [19] T.-H. HoX. Su and Y. Wu, Distributional and peer-induced fairness in supply chain contract design, Production and Operations Management, 23 (2014), 161-175.  doi: 10.1111/poms.12064.
    [20] Z. Hong and X. Guo, Green product supply chain contracts considering environmental responsibilities, Omega-International Journal of Management Science, 83 (2019), 155-166.  doi: 10.1016/j.omega.2018.02.010.
    [21] J. JiZ. Zhang and L. Yang, Carbon emission reduction decisions in the retail-/dual-channel supply chain with consumers' preference, Journal of Cleaner Production, 141 (2017), 852-867.  doi: 10.1016/j.jclepro.2016.09.135.
    [22] S. JeonJ. Qi and J. Wang, Do local consumers behave differently from visitors? An exploratory study in online group buying, Electronic Commerce Research and Applications, 25 (2017), 95-104.  doi: 10.1016/j.elerap.2017.08.004.
    [23] D. KahnemanJ. L. Knetsch and R. H. Thaler, Fairness as a constraint on profit seeking: Entitlements in the market, American Economic Review, 76 (1986), 728-741. 
    [24] K. Kang, M. Wang and X. Luan, Decision-making and coordination with government subsidies and fairness concerns in the poverty alleviation supply chain, Computers & Industrial Engineering, 152 (2021). doi: 10.1016/j.cie.2020.107058.
    [25] C. KeB. Yan and R. Xu, A group-buying mechanism for considering strategic consumer behavior, Electronic Commerce Research, 17 (2017), 721-752.  doi: 10.1007/s10660-016-9232-9.
    [26] B. LiP.-W. Hou and Q.-H. Li, Cooperative advertising in a dual-channel supply chain with a fairness concern of the manufacturer, Ima Journal of Management Mathematics, 28 (2017), 259-277.  doi: 10.1093/imaman/dpv025.
    [27] J. LiX. Fan and B. Dai, Fairness of extra-gain guilty in performance of supply chain and contract design, Journal of Systems Science & Complexity, 30 (2017), 866-882.  doi: 10.1007/s11424-017-5133-9.
    [28] K. J. Li and S. Jain, Behavior-based pricing: An analysis of the impact of peer-induced fairness, Management Science, 62 (2016), 2705-2721.  doi: 10.1287/mnsc.2015.2265.
    [29] Q. LiT. Xiao and Y. Qiu, Price and carbon emission reduction decisions and revenue-sharing contract considering fairness concerns, Journal of Cleaner Production, 190 (2018), 303-314.  doi: 10.1016/j.jclepro.2018.04.032.
    [30] X. LiX. CuiY. LiD. Xu and F. Xu, Optimisation of reverse supply chain with used-product collection effort under collector's fairness concerns, International Journal of Production Research, 59 (2021), 652-663.  doi: 10.1080/00207543.2019.1702229.
    [31] W. M. Lim, Online group buying: Some insights from the business-to-business perspective, Industrial Marketing Management, 65 (2017), 182-193.  doi: 10.1016/j.indmarman.2017.03.011.
    [32] L. LiuF. ZhangH. Li and C. Wen, Research on the community group buying marketing model of fresh agricultural products in Jilin Province from the perspective of internet marketing and retail, IOP Conference Series: Earth and Environmental Science, 769 (2021), 022054.  doi: 10.1088/1755-1315/769/2/022054.
    [33] W. LiuD. WangX. ShenX. Yan and W. Wei, The impacts of distributional and peer-induced fairness concerns on the decision-making of order allocation in logistics service supply chain, Transportation Research Part E-Logistics and Transportation Review, 116 (2018), 102-122.  doi: 10.1016/j.tre.2018.05.006.
    [34] N. M. Modak and P. Kelle, Managing a dual-channel supply chain under price and delivery-time dependent stochastic demand, European Journal of Operational Research, 272 (2019), 147-161.  doi: 10.1016/j.ejor.2018.05.067.
    [35] T. Nie and S. Du, Dual-fairness supply chain with quantity discount contracts, European Journal of Operational Research, 258 (2017), 491-500.  doi: 10.1016/j.ejor.2016.08.051.
    [36] S. M. Pahlevan, S. M. S. Hosseini and A. Goli, Sustainable supply chain network design using products' life cycle in the aluminum industry, Environmental Science and Pollution Research, (2021). doi: 10.1007/s11356-020-12150-8.
    [37] K. Pan, Z. Cui, A. Xing and Q. Lu, Impact of fairness concern on retailer-dominated supply chain, Computers & Industrial Engineering, 139 (2020). doi: 10.1016/j.cie.2019.106209.
    [38] S. PandaN. M. Modak and L. Eduardo Cárdenas-Barrón, Coordinating a socially responsible closed-loop supply chain with product recycling, International Journal of Production Economics, 188 (2017), 11-21.  doi: 10.1016/j.ijpe.2017.03.010.
    [39] Q. Qiu and L. Jiang, Consumer-driven group buying: Trick or treat to retail stores?, Journal of Systems Science and Systems Engineering, 27 (2018), 1-23.  doi: 10.1007/s11518-016-5326-0.
    [40] M. Rabin, Incorporating fairness into game theory and economics, The American Economic Review, 114 (1993), 1281-1302. 
    [41] A. Ranjan and J. K. Jha, Pricing and coordination strategies of a dual-channel supply chain considering green quality and sales effort, Journal of Cleaner Production, 218 (2019), 409-424.  doi: 10.1016/j.jclepro.2019.01.297.
    [42] A. Sharma, G. Dwivedi and A. Singh, Game-theoretic analysis of a two-echelon supply chain with option contract under fairness concerns, Computers & Industrial Engineering, 137 (2019). doi: 10.1016/j.cie.2019.106096.
    [43] Y.-D. ShuY. Dai and Z.-J. Ma, Pricing decisions in a reverse supply chain with peer-induced fairness concern, Industrial Engineering and Management, 23 (2018), 116-122.  doi: 10.19495/j.cnki.1007-5429.2018.03.016.
    [44] T. Thanh and R. Desiraju, Group-buying and channel coordination under asymmetric information, European Journal of Operational Research, 256 (2017), 68-75.  doi: 10.1016/j.ejor.2016.05.054.
    [45] J. Wang and J. Liu, Vertical contract selection under chain-to-chain service competition in shipping supply chain, Transport Policy, 81 (2019), 184-196.  doi: 10.1016/j.tranpol.2019.06.013.
    [46] Y. Wang and W. Qiu, Optimization of distribution path for community group buying considering customer satisfaction, IOP Conference Series: Materials Science and Engineering, 792 (2020), 012008.  doi: 10.1088/1757-899x/792/1/012008.
    [47] Y.-Y. WangJ. Sun and J.-C. Wang, Equilibrium markup pricing strategies for the dominant retailers under supply chain to chain competition, International Journal of Production Research, 54 (2016), 2075-2092.  doi: 10.1080/00207543.2015.1101174.
    [48] Y.-Y. WangF. Tao and J.-C. Wang, Designing optimal and practical volume discounting contracts for the dominant retailer with information asymmetry, International Transactions in Operational Research, 24 (2017), 1405-1433.  doi: 10.1111/itor.12200.
    [49] Y. Wu and L. Zhu, Joint quality and pricing decisions for service online group-buying strategy, Electronic Commerce Research and Applications, 25 (2017), 1-15.  doi: 10.1016/j.elerap.2017.07.003.
    [50] Y. YanR. Zhao and Y. Lan, Asymmetric retailers with different moving sequences: Group buying vs. individual purchasing, European Journal of Operational Research, 261 (2017), 903-917.  doi: 10.1016/j.ejor.2017.02.025.
    [51] L. ZhangH. ZhouY. Liu and R. Lu, Optimal environmental quality and price with consumer environmental awareness and retailer's fairness concerns in supply chain, Journal of Cleaner Production, 213 (2019), 1063-1079.  doi: 10.1016/j.jclepro.2018.12.187.
    [52] R. Zhang and B. Liu, Group buying decisions of competing retailers with emergency procurement, Annals of Operations Research, 257 (2017), 317-333.  doi: 10.1007/s10479-016-2108-5.
    [53] S. ZhangJ. Zhang and G. Zhu, Retail service investing: An anti-encroachment strategy in a retailer-led supply chain, Omega-International Journal of Management Science, 84 (2019), 212-231.  doi: 10.1016/j.omega.2018.05.005.
    [54] T. ZhangX. Feng and N. Wang, Manufacturer encroachment and product assortment under vertical differentiation, European Journal of Operational Research, 293 (2021), 120-132.  doi: 10.1016/j.ejor.2020.11.044.
    [55] Y. Zhang and B. Hezarkhani, Competition in dual-channel supply chains: The manufacturers' channel selection, European Journal of Operational Research, 291 (2021), 244-262.  doi: 10.1016/j.ejor.2020.09.031.
    [56] X.-X. ZhengZ. LiuK. W. LiJ. Huang and J. Chen, Cooperative game approaches to coordinating a three-echelon closed-loop supply chain with fairness concerns, International Journal of Production Economics, 212 (2019), 92-110.  doi: 10.1016/j.ijpe.2019.01.011.
    [57] M. ZhouB. DanS. Ma and X. Zhang, Supply chain coordination with information sharing: The informational advantage of GPOs, European Journal of Operational Research, 256 (2017), 785-802.  doi: 10.1016/j.ejor.2016.06.045.
    [58] Q. ZhuR. ZuoS. Liu and F. Zhang, Online dynamic group-buying community analysis based on high frequency time series simulation, Electronic Commerce Research, 20 (2020), 81-118.  doi: 10.1007/s10660-019-09380-5.
  • 加载中




Article Metrics

HTML views(1602) PDF downloads(842) Cited by(0)

Access History

Other Articles By Authors



    DownLoad:  Full-Size Img  PowerPoint