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The impact of trade policy on global supply chain network equilibrium: A new perspective of product-market chain competition
Abstract
In the context of globalization, cross-border transactions are growing. Trade policies essentially strike the global supply chain networks. They not only change product flows but may also disrupt some chains. To reveal how trade policies, including tariffs, quotas, and subsidies, affect the global supply chain equilibrium, this study first decomposes the supply chain network into several product-market chains (PM chains) according to the product flows and the directed market. Second, to characterize the inter-chain competition under the Cournot-Nash competition, we establish an optimization model for each PM chain and provide the equilibrium conditions by using variational inequality theory. Third, we propose the qualitative properties of the equilibrium and solve the model using the Euler algorithm. Finally, to analyze the influence of different trade policies imposed at different stages, we conduct several numerical examples based on a network that is close to reality. We figure out the threshold when one chain is disrupted by the trade policy. PM chain disruption reconstructs the network and generates a new equilibrium. It explains the appearance of inflection points when analyzing the policies’ effects. Here we summarize the major impacts of trade policies before network reconstruction. All three trade policies imposed on the supply side increase the competitive advantage of domestic raw material suppliers, but they hurt domestic final product producers in the studied network. On the other hand, these trade policies imposed on the demand side benefit the domestic final product producer while hurting the foreign final product producer. The effects of tariff/quota and subsidy imposed on the demand side have the opposite effects on raw material suppliers: the tariff/quota decreases while the subsidy increases the output of the raw material suppliers. We consider three extensions with the adjusted network structures and partially substitutable products to demonstrate the wide applicability of the proposed approach. This work contributes to the literature by providing a methodology to investigate inter-chain competition in a global supply network in the presence of trade policies.
... In this paper, the concept of PMC is used to describe the cross-border SC system for electronic products produced in Vietnam (Country 1) and Singapore (Country 2) [34]. A PMC comprises firms (nodes) and business activities (links) involved in procurement, production, transportation and marketing, which are necessary for the final product. ...
... Zhang et al [33] initially proposed a framework for the chain-to-chain competition model, laying a foundation for the research on chain-to-chain competition within cross-border traditional SCs. Based on this framework, Feng et al [34] constructed a model of chain-tochain output competition in a cross-border traditional SC, and thoroughly investigated effects of trade policy on equilibrium values of output. These two studies on chain-to-chain competition of cross-border SCs [33,34] only discuss the chain-to-chain competitive equilibrium of a single traditional SC from a static perspective. ...
... Based on this framework, Feng et al [34] constructed a model of chain-tochain output competition in a cross-border traditional SC, and thoroughly investigated effects of trade policy on equilibrium values of output. These two studies on chain-to-chain competition of cross-border SCs [33,34] only discuss the chain-to-chain competitive equilibrium of a single traditional SC from a static perspective. ...
To investigate the impact of recycling modes on the stability of cross-border supply chain (SC) systems, this paper decomposes a cross-border SC system, consisting of two countries with different recycling capabilities for electronic products, such as Singapore and Vietnam, into three product-market chains (PMCs). Discrete dynamical models for output and recycling rate decisions of the system are developed based on four recycling modes. The Nash equilibrium solutions and stability conditions of the models are obtained via nonlinear dynamics principles; the stable regions and chaotic phenomena of the system, and the impact of tariff on the system stability are investigated through numerical simulation. Our findings suggest that to ensure the system stability, PMCs should adjust output and recycling rates, respectively, at low speeds. Retailer recycling mode shows the largest stable region of system decisions. When the adjustment speeds of output and recycling rate increase, the stable regions of the system in the four recycling modes are compacted. In addition, an increase in tariff levels can adversely affect the system stability. Finally, increasing recycling prices and marginal recycling transaction costs can expand the stable regions of the system, mitigate the adverse impact of tariffs, and enhance the profit stability of the closed-loop PMC.
... With the advancement of information technology and the maturity of the market, competition among supply chain members within the same industry has transformed into chain-to-chain competition between supply chains [26][27][28]. McGuire et al. [26] were the first to propose a research framework for chain-to-chain competition in the context of traditional supply chains. Building on this foundation, Zhang et al. [27] introduced an economic model for chain-to-chain competition in traditional supply chains and presented a framework for its variational inequality. ...
... Building on this foundation, Zhang et al. [27] introduced an economic model for chain-to-chain competition in traditional supply chains and presented a framework for its variational inequality. Feng et al. [28] developed a chain-to-chain output competition model for multi-national traditional supply chains, providing an indepth analysis of the impact of trade policies on production equilibria. However, research focusing on the strategic choices and competitive decisions of CBEC supply chains from the perspective of chain-to-chain competition remains scarce. ...
... To describe the chain-to-chain competition relationships within this system, this study refers to the concept of product-market (PM) chains, as proposed by Feng et al. [28], and decomposes the system into four PM chains. Each chain involves companies engaged in product procurement, production, transportation, recycling, and marketing; the target market; and the business activities connecting these companies. ...
To investigate the dynamic complexity of chain-to-chain output decisions in a closed-loop supply chain system of cross-border e-commerce (CBEC), this study decomposes the system into four product–market (PM) chains, based on the e-commerce platform’s information-sharing strategy and the manufacturer’s selected logistics mode (direct mail or bonded warehouse). By combining game theory with complex systems theory, discrete dynamic models for output competition among PM chains under four scenarios are constructed. The Nash equilibrium solution and stability conditions of the models are derived according to the principles of nonlinear dynamics. The stability of the model under the four scenarios, as well as the impacts of the initial output level and comprehensive tax rates on the stability and stability control of the system, are analyzed using numerical simulation methods. Our findings suggest that maintaining system stability requires controlling the initial output levels, the output adjustment speeds, and tariff rates to remain within specific thresholds. When these thresholds are exceeded, the entropy value of the model increases, and the system outputs decisions to enter a chaotic or uncontrollable state via period-doubling bifurcations. When the output adjustment speed of the four PM chains is high, the direct-mail logistics mode exhibits greater stability. Furthermore, under increased tariff rates for CBEC, the bonded warehouse mode has a stronger ability to maintain stability in system output decisions. Conversely, when the general import tax rate increases, the direct-mail mode demonstrates better stability. Regardless of the logistics mode, the information-sharing strategy can enhance the stability of system output decisions, while increased e-commerce platform commission rates tend to reduce stability. Interestingly, the use of a non-information-sharing strategy and the direct-mail logistics mode may be more conducive to increasing the profit levels of overseas manufacturers. Finally, the delayed feedback control method can effectively reduce the entropy value, suppress chaotic phenomena in the system, and restore stability to output decisions from a fluctuating state.
... This can have significant social implications, particularly for vulnerable populations who may be disproportionately affected by economic disruptions [40]. From the businesses point of view, this risk can distort the market signals leading to inefficiencies in the supply chain [43]. • More vulnerable workers and populations: protectionism can generate supply chain disruptions with significant social impacts, particularly in regions where certain industries are a major source of employment. ...
... This risk is related to the complexity for companies to manage different tax structures from different jurisdictions. -Potential inefficiencies in the supply chain [43]. ...
... -Lack of competitiveness and discrimination [43]. -Disincentive domestic industries to invest in their operations and make them less resilient to disruptions. ...
... In another dimension, the global trade expansion has been strongly driven by regional dynamics involving proliferation in regional trade agreements (Esteve-Pérez et al. 2020). Trade policies also affect global supply chain networks, altering product flows (Lin et al. 2023;Chen et al. 2023;Feng et al. 2022). According to trade network linkages, intermediate inputs are more important if their suppliers are more concentrated, and industrial chains containing several key intermediate inputs tend to be more complex than those in other sectors (Cui et al. 2023). ...
... The supply chain also encompasses all material and product flows from suppliers to customers, integrating orders, production, marketing, distribution, and other business activities. Feng et al. (2022) studied the logistics network in terms of goods flow, market accessibility, trade subsidies, and trade tariffs. Quotas and tariffs both affect the network's equilibrium in comparable ways. ...
... Understanding the effects of trade policy in highly competitive global supply chain networks is essential (Feng et al. 2022). Galeshi (2019) concluded that, in international trade, the logistics and supply chain are crucial, and this leads to the development of manufacturing sectors. ...
Economic integration, which in today’s global trade is the fundamental component of linking economic ties between countries, is another important factor in the acceleration of economic growth. The provision of trade logistics services is essential to a nation’s economic success in international trade activities. It is essential for enterprises engaged in active international trade to achieve competitive advantages. The international trade and localised commercial activity, to a large extent, is dependent on the logistics and supply chain infrastructure and operational capacity. However, the area received little attention from the perspective of applied economics. The in-depth empirical studies on the impacts of logistics on trade efficiency are few and limited. The study aims to investigate the role of logistics and supply chains in international and national trade in a developing country. It uses secondary data for the analysis. The model and software used in the study are the gravity model and GTAP10a. The time horizon used spans 2014–2030. The results show that in order to enhance trading and commercial activities, a developing country should develop logistics and supply chain infrastructure, train people, and design a flexible logistics policy.
... From the perspective of supply chain networks, companies not only face competition from other companies in a vertical chain but must also take into account horizontal competition with other supply chains at the same level. Meanwhile, in operational practice, competition among enterprises is gradually evolving into inter-chain competition with the goal of achieving win-win outcomes [4]. Therefore, the study of inter-supply chain competition can not only enrich and develop the theoretical literature on supply chain system management but also has important significance for the practical guidance of supply chain management. ...
... However, a firm's competitive advantage largely depends on its supply chain's competitive advantage. Competition among firms has gradually evolved into inter-chain competition [4]. Recently, studies on inter-chain competition have concentrated on the analysis of the structure of channels (integrated or decentralized) between two parallel supply chains with exclusive suppliers [28][29][30], and contract options between two dual-channel supply chains [31]. ...
... On this basis, Zhang et al. [32] developed a supply chain competition model with intertwined structures in which numerous products compete in multiple marketplaces from the perspective of inter-chain competition. Feng et al. [4] built an output competition model among global supply chains and examined how trade policies affect the equilibrium of global supply chain networks. The above two studies both regard inter-chain competition as a static process: competition is perceived as a single-stage process or a one-shot game. ...
In this paper, an output dynamic game model of intertwined supply chains operating in two different countries is established. The Nash equilibrium point of the model and its stable region are obtained using nonlinear dynamic principles. The complex properties of the system, such as stability, period-doubling bifurcations, and chaos, are investigated using numerical simulations. Our results suggest that the level of output and the system’s profits undergo bifurcation and chaos with an increase in the output adjustment speed. An interesting phenomenon occurs in that higher tariffs lead to the expansion of the stable range of the supply chain in the product-exporting country. The chaotic behavior of the system is sensitive to the value of the initial level of output. In supply chain competition, each supply chain firm should make suitable adjustments to the speed of output. To maintain the stability of domestic markets, excessive tariffs should be avoided. It is essential that each supply chain firm evaluates the potential impacts of different initial output values when making initial decisions. Using the method of delayed feedback control, the chaotic behavior of the system can effectively be controlled. These findings offer valuable and novel insight into inter-chain competition in supply chain networks.
... These studies usually aim to maximize the overall profit and minimize the overall cost of the system, build a multi-objective decision optimization model and achieve Pareto optimization by solving the model, such as in Diabat and Jebali [18] and Salehi-Amiri et al. [21]. However, this kind of research can only solve the problem of optimal operation of the whole system and cannot achieve the optimal decision of each member [22,23]. ...
... This stream is the operation of the LC-CLSC and sustainable supply chain under government intervention. Although the simple-structure supply chain system is an ideal supply chain [23], this stream is one of the important branches in the literature on supply chain operation. This is because supply chain research includes many directions, such as healthcare supply chain [28], agricultural product supply chain [29] and industrial manufacturing supply chain [30]. ...
... Considering recycling subsidy and CO2e constraint policies, Tao et al. [52] constructed a network equilibrium model using variational inequality and found that for any given CO2e constraint, the recycling subsidy level has a positive effect on increasing recycling efficiency. Using the same model construction method as Tao et al. [52], an LC-CLSCN equilibrium model considering tariff/quota and subsidy policies was developed by Feng et al. [23], who also obtained the impact of policy changes on LC-CLSCN equilibrium results through numerical examples. Through the analysis of the above documents, we can find that no matter what policies the government implements, these policies can reduce the CO2e of the LC-CLSCN system to a certain extent. ...
To promote carbon emission reduction and resource reuse, this study is devoted to studying the impact of government subsidy policies on the operation decision of a low-carbon closed-loop supply chain system. In the production stage, governments can use carbon reduction subsidies and remanufacturing subsidies to reduce the green behavior costs of manufacturers; in the recycling stage, governments can use consumer recycling subsidies to increase the recycling willingness of consumers. In this study, we introduce these three subsidy policies into the target function of the subsidized members. Using the Nash non-cooperative game and variational inequality, we developed a low-carbon supply chain network equilibrium model to examine the impact of subsidy policies on the system operation decision. The results show that, under the three subsidy policies, raising the subsidy level can help to improve the recycling rate, promote the reduction in carbon emissions and improve the profits of retailers; however, manufacturers’ incomes increase only when the carbon reduction subsidy level is below a certain threshold. Notably, under the coexistence of three subsidy policies, the carbon reduction subsidy policy has a more significant impact on the system. Finally, the numerical results show that, when the subsidy level is higher than six, although the increase in carbon reduction subsidy level leads to a decrease in the profits of manufacturers, this policy has the best contribution to the environmental benefits of the system. Our results can serve as guidelines for governments when designing the optimal subsidy programs to achieve the ultimate goal of establishing an environmentally friendly supply chain network system.
... In this sense, trade policies related to tariffs, quotas, and subsidies affect global supply chain networks; that is, these policies imposed on the demand side benefit the national producer and harm the foreign producer of final goods. On the supply side, it improves the competitiveness of national suppliers of raw materials but harms national producers of final goods (Feng et al., 2022). However, despite the costs and benefits, companies that participate in exports tend to improve the competitiveness of their products and expand their foreign networks; in addition, they increase their purchases of intermediate inputs from foreign suppliers (Kang and Whang, 2023). ...
... The trade policy of developed countries is based on providing tariff preferences to developing countries; in this sense, the bilateral and multilateral trade agreements signed between Canada, the United States of America, and the European Union with some Latin American countries (Chile, Peru, Colombia, Mexico, among others) must provide balance in the global value chain of blueberries, without distorting the market with quotas and subsidies (Absell, 2022;Feng et al., 2022) or through companies that operate in different countries, as is the case of Hortifrut, the main producer of organic blueberries worldwide with presence in the United States of America, China, Chile, Mexico, Guatemala, Argentina, Uruguay, Spain, Brazil, and Peru (Almonacid, 2018). ...
There were no studies about the structure of the international fresh blueberry market in developing countries for contributing to the development of strategies and policies for the production, imports, and exports of fresh blueberries in the involved countries. The purpose of the study was to evaluate the structure of the international fresh blueberry market in the period 2001–2020. The research design was non-experimental, and longitudinal, with trends on per capita consumption, the market concentration index, and a multiple linear regression model. It was concluded that per capita consumption is led by Canada and the USA and that the concentration indices of the four main countries [CR(4)] of production, imports, and exports went from very high concentration levels to high concentration levels. The eight main countries [CR(8)] of production and exports were at a very high level and imports went from a very high level to a high level; in addition, the Herfindal–Hirschman-Index (HHI) of production was at a highly concentrated level: (a) highly concentrated level in imports in the period 2001–2018, (b) moderately concentrated from 2019 in imports, (c) highly concentrated in exports in the period 2001–2009, (d) moderately concentrated in exports in the period 2010–2018, and (e) not concentrated in exports as of 2019; in addition, the multiple linear regression model showed that per capita consumption, market share, price, and production contribute with 94.3% of the explanation of the variability of fresh blueberry exports. Finally, it was recommended to study the blueberry consumption habits and access restrictions to other international markets for increasing blueberry exports.
... After that, bitcoin has presented an outstanding performance, not only with high returns, but also as a hedge or safe haven which is similar to gold, thus bitcoin is also known as "digital gold" (Bouri & Gupta, 2019;Su et al., 2020d;Chkili et al., 2021;Yang et al., 2022;Zhu et al., 2022). As the economic globalisation becomes an irreversible trend (Blanton & Apodaca, 2007), the global supply chain is evolving correspondingly (Ekinci et al., 2022;Feng et al., 2022). The global supply chain refers to the extension of the supply chain system to the whole world, which is characterised by complexity and vulnerability, that is, each node is a "vulnerable point", the collapse of one country's supply could disrupt the global supply system (Golan et al., 2020;Bonadio et al., 2021;Jomthanachai et al., 2022). ...
... On the one hand, the collapse of bitcoin bubbles makes BP plunge, despite the high GSCP. For instance, the global trade war (particularly the disputes between China and the U.S.) makes GSCP rise obviously (Blessley & Mudambi, 2022;Feng et al., 2022), but BP dramatically declines from 12953.93 dollars in January 2018 to 3713.89 dollars in December 2018, which decreases by 70% due to the bitcoin bubble burst (Li et al., 2019;Qin et al., 2021). On the other hand, during the periods with high GSCP, if the value of other assets is higher than bitcoin, its demand and price might fall. ...
Exploring the safe-haven characteristics of bitcoin from novel perspectives is crucial to diversify the investment and reap the benefits. This investigation employs bootstrap full-and sub-sample techniques to probe time-varying interrelation between global supply chain pressure (GSCP) and bitcoin price (BP), and further answer if “digital gold” could resist the strains of global supply chain. The empirical outcomes suggest that GSCP positively and negatively affects BP. The positive influence points out that high GSCP might boost the international bitcoin market, driving BP to rise, which indicates that “digital gold” could resist the pressures of global supply chain. But the negative effect of GSCP on BP could not support the above view, mainly affected by the weak purchasing power and more valuable assets, which is not consistent with the assumption of the inter-temporal capital asset pricing model (ICAPM). In turn, GSCP is adversely affected by BP, highlighting that the international bitcoin market may be viewed as a stress reliever for the global supply chain. Against a backdrop of the deteriorative Russia-Ukraine war and the intensifying global supply chain crisis, the above conclusions could bring significative lessons to the public, enterprises and related economies.
... A Benders decomposition algorithm was proposed to address the computational complexity of the large-scale problem. A modeling approach to analyzing inter-supplychain rivalry in global supply networks in the presence of trade policies was provided by Feng et al. [32]. In the context of globalization, cross-border transactions are growing. ...
... obtain k > 1 8 . Ultimately, using Equations (30)- (32), the equilibrium solution of the optimal chain i can be obtained by substituting its objective profit function and finding its optimal profit, the following proposition can be obtained. Proposition 3: Given parameters a, c P , c C , k, and u, the optimal results of the DD competition model are as follows. ...
In the logistics sector, price competition is no longer the only form of horizontal competition between logistics service integrators; instead, it frequently takes the form of service efficiency competition among chains. Facing fierce market competition, vertical resource integration gradually becomes the trend in logistics industry integration. Using the inverse derivation method and comparative analysis, this study examines the relationship between the overall profit of its chain and that of the rival chain under service efficiency competition with or without the integration strategy. Furthermore, it builds two parallel competition logistics service supply chain models based on the inter-chain Nash competition and Stackelberg game of the chain members. The study results demonstrate that when the cost per unit of service efficiency is fixed, the greater the intensity of competition between chains, the more managers should tend to choose an integration strategy to maximize their profits. More interestingly, we find that the optimal integration decision of the supply chain is independent of the competitive intensity when the cost required to improve the unit service efficiency is extremely high.
... Contrary to the objectives of encouraging modernisation and protecting employment, the measure resulted in increased costs for the automotive industry, construction and consumer goods manufacturers (Klomp, 2025). Feng et al. (2022) observe that the absence of segmentation has deleterious consequences for companies that rely on imported raw materials yet provides no assurance that the 'protected' sectors will become more competitive in the long term. In this scenario, tariffs served as a disincentive to efficiency, investment, and innovation. ...
In the context of global economic integration, tariff policies are commonly regarded as relics of the protectionist past, particularly inadequate for advanced economies. Nevertheless, the recent adoption of broad tariff measures by the United States under the Trump administration reignited debates about the strategic use of tariffs in open markets. This opinion article critically examines the economic and geopolitical implications of tariff imposition in a mature economy. Drawing on empirical studies and trade policy analyses, the paper identifies exceptional contexts where tariffs may be justified (such as national security and environmental regulation) highlighting the inefficiencies and unintended consequences arising from unilateral and poorly coordinated protectionist strategies. The findings suggest that open economies should prioritize innovation, multilateral cooperation, and institutional trade frameworks over reactive tariff-based approaches.
... Furthermore, strategies for managing multiple supply chains toward sustainability have been explored (Brandao and Godinho-Filho, 2022), along with research on supply chain resilience in response to various disruptions (Carvalho et al., 2022), leading to the proposal of a resilience assessment index. The influence of trade policies on global supply chains has been investigated, emphasizing competitive dynamics within supply chains (Feng et al., 2022). Recent approaches include game-theoretic models that take into account uncertain demand and investments in green technology (Gupta et al., 2023), as well as analyses of dual-channel supply chains, focusing on optimal pricing strategies for manufacturers and retailers over multiple periods . ...
This paper proposes a novel nonlinear programming model to capture the equilibrium state of complex supply chain networks. The model, equivalent to a variational inequality model, relaxes traditional strict assumptions to accommodate real-world complexities, such as nonlinear, non-convex, and non-smooth relationships between production, consumption, and pricing. To efficiently solve this challenging problem, we introduce a novel heuristic algorithm, the adaptive and various learning-based algorithm (AVLA), inspired by group learning behaviors. AVLA simulates individual learning processes within different subgroups at various stages, employing a success history-based parameter adaptation mechanism to reduce manual tuning. Extensive computational experiments on 29 benchmark problems and 5 supply chain networks demonstrate AVLA's superior performance compared to 19 state of the art algorithms. AVLA consistently achieves the best results in terms of both average and best objective function values, making it a powerful tool for addressing complex supply chain network equilibrium problems.
... Supply chain risks can arise from a variety of factors, including geopolitical tensions, market uncertainties, and operational inefficiencies [3][4][5]. Identifying and analyzing the causes of supply chain disruptions is crucial to mitigating risks and maintaining the flow of goods. Effective risk management strategies require a deep understanding of where risks originate, as incorrect identification can lead to inadequate responses [6]. ...
Lithium is a critical strategic resource essential for electric vehicles and lithium-ion batteries, both of which play pivotal roles in the transition to renewable energy. This study examines the global lithium supply chain, analyzing four representative products—lithium carbonate, lithium hydroxide, lithium-ion batteries, and electric vehicles—across the upstream, midstream, and downstream sectors from 2012 to 2023. Utilizing complex network theory, the research explores the structural characteristics and dynamic evolution of global trade networks before and after the U.S.-China trade war. The findings reveal that the lithium supply chain exhibits strong small-world characteristics, with high clustering coefficients and relatively short path lengths across all stages. Differences in trade network patterns were observed between products: lithium hydroxide shows more regional concentration, while electric vehicles demonstrate a more globalized trade network. These insights offer important implications for understanding supply chain resilience and vulnerability in the face of geopolitical conflict.
... Trade policies can also influence the availability of these goods and their close substitutes, which has a bearing on elasticity. Pricing domestic products high because of high tariffs on imported goods can make demand for them inelastic since consumers have limited choices [26]. ...
The theory of elasticity is important to economics and businesses because it helps to understand consumption patterns and the effects of actions taken in the economic environment. It is defined by three types: determination of price elasticity of demand (PED), income elasticity of demand (YED), and cross elasticity of demand (XED). Economists like contributed to the early development of elasticity theory. Elasticity functions as a tool that businesses apply when coming up with pricing policies, marketing strategies, and product differentiation. It also informs revenue management strategies, product management, consumer choice analysis, supply chain management, and operations management. Other factors, such as market structure, economic conditions, technology, and government policies, affect elasticity when conducting business in different market fields. Real-life examples of elasticity include evaluating price positioning or the demand range. It also influences international trade patterns, such as changes in foreign exchange rates, tariff imposition, and cases of export promotion through subsidies. Innovative approaches to elasticity analysis, including AI, machine learning, and predictive analysis, should have implications for business decision-making and risk management. This review examines the role of elasticity in shaping business strategy and economic policy. We utilised relevant published data (2004-2014) from diverse, reliable databases. Findings suggest the vital role of elasticity in economics and business, emphasising its relevance in shaping strategies, driving innovation, and adapting to dynamic market conditions. Highlight the ongoing evolution of elasticity analysis and its implications for future business practices.
... Secondly, the infrastructure construction perspective emphasizes that robust software and hardware infrastructure can reduce transportation and inventory costs, thereby enhancing overall supply chain efficiency [4][5][6]. Thirdly, the transportation planning, supply chain networks, and management perspective aims to improve transportation efficiency, optimize supply chain structures, and enhance supply chain management [7][8][9][10][11][12][13]. ...
In an environment marked by global economic volatility and geopolitical uncertainties, the stability of Taiwan’s supply chain takes on heightened importance, particularly given Taiwan’s crucial role in the global semiconductor supply chain. In recent years, semiconductor companies in Taiwan have faced increasing inventory pressures, which will reduce their competitiveness and increase operational costs over the long term. Although previous studies have explored the influence of trade facilitation on macroeconomic and trade efficiencies, its specific impacts on the semiconductor industry have been less frequently addressed. This study integrates corporate inventory, trade facilitation, and geopolitical factors within a unified analytical framework to construct a model that explores mediating and moderating effects. This study conducted regression analysis on data from 52 Taiwan-listed integrated circuit companies from 2014 to 2022. Contrary to traditional findings that trade facilitation decreases inventory in other industries, it predominantly fosters inventory accumulation within Taiwan’s semiconductor sector by expanding market size, thereby affecting supply chain efficiency. Moreover, geopolitical factors were found to intensify the effects of trade facilitation on corporate inventory. Elevated geopolitical risks lead to greater inventory accumulation, which ultimately threatens long-term competitiveness and diminishes the semiconductor industry’s advantage in Taiwan, further influencing supply chain efficiency. Consequently, this study recommends that to more accurately forecast market size, semiconductor companies in Taiwan are encouraged to expand their manufacturing investments in Chinese mainland. Additionally, the prudent handling of cross-strait relations by the Taiwan authorities is an important strategy to mitigate geopolitical risks affecting the semiconductor supply chain.
... Zhang and Zhang (2019) detected the impact of pricing decisions among new products and remanufacturing products, known as the cannibalization effect and location-inventory decisions, on supply chain demand and profitability. Furthermore, some related research can be found in Wang et al. (2021), Feng et al. (2022, Yan et al. (2021), Yang et al. (2021), Shang et al. (2022), Manupati et al. (2022), and Nikzamir and Baradaran (2020). Table A1 in Appenedix A 1 categorizes the main characteristics of the studies reviewed above. ...
... Trade agreements, disputes, and negotiations are often centered around the terms dictated by tariff and quota measures. The complexity of these relationships underlines the delicate balance nations must maintain in the global food market (Anderson, 2022;Brander et al., 2023;Feng et al., 2022). ...
This research seeks to assess the impact of Indonesia's tariff and quota policies on global food trade. It uses the Systematic Literature Review technique to thoroughly analyse the impact of various trade policies on market dynamics, with a particular focus on economic, social and environmental dimensions. The results emphasise Indonesia's important position in the world food market, providing valuable insights into the complex relationship between national priorities and international trade responsibilities. It highlights the importance of these rules in influencing global trade tactics, providing crucial insights for policymakers, economists, and business executives. This extensive analysis examines Indonesia's strategic impact and the wider consequences of its policies on global food security and market stability. The research implications are an important reference for understanding the complex dynamics of global market forces, focusing on the delicate balance between national policymaking and international trade commitments.
... Carvalho et al. [36] studied the resilience of supply chains to various disturbances and proposed an index for assessing resilience. Feng et al. [37] examined the impact of trade policies on the global supply chain network from the perspective of competition among supply chains. Gupta et al. [38] presented a game-theoretic analytical supply chain model considering uncertain demand and green technology investment. ...
... Hou et al. established a twostage model for incumbents and entrants of the market to study their cooperation strategies and optimal innovation input level in different market environments [21] . Feng et al., according to the product flows and the directed market, studied how cross-border trade policies (including tariffs, quotas, and subsidies) affect the competitive advantages and profits of each participant in the global supply chains [22] . Ilhang and Lee used the empirical data of listed companies in South Korea to study the impact of product market competition on enterprises' IR&D investment. ...
... Under specific conditions, the government may also punish an LM by collecting taxes, charging fines, or applying the trade barrier policy. Although "government penalty" about reshoring has not been discussed in the global supply chain precisely, it was usually mentioned as "trade tariffs" in previous research, which was established to protect indigenous merchandise or "bring manufacturing back" ( Dong & Kouvelis, 2019 ;Feng et al., 2022 ;. For example, U.S. President Biden also proposed a tax penalty for offshoring in 2020, which called for an additional 10% "offshoring penalty surtax" on manufactured goods and services profits ( Wilkie, 2020 ). ...
Multinational firms can outsource to contract manufacturers in low-labor-cost regions. However, in recent years, several developed countries and regions have subsidized their local manufacturers (LM[s], she) to encourage reshoring for external benefit (e.g., creating more domestic jobs or improving industrial structure), especially after the COVID-19 pandemic started. This paper investigates the sourcing problem of an LM with brand premium in the presence of government subsidy and differences in labor costs. An LM faces three options: producing in-house, outsourcing to an original brand manufacturer (OBM, he), which sells competitive substitutes without brand premium, or outsourcing to a non-competing contract manufacturer (NCM). We find that, first, the LM chooses reshoring if the external benefit or brand premium is sufficiently high. Second, if the LM decides to outsource, she chooses the OBM (NCM) if her brand premium is high (low). Third, the government prefers to subsidize LM reshoring or outsourcing to an NCM. If the government intends to induce LM to reshore, the subsidy should be at a moderate level. Interestingly, when the LM has a low brand premium but chooses outsourcing, the government still subsidizes her to improve her competitiveness.
... As an important engine for economic growth, the development of foreign trade directly affects a country's share in the global trade market and its position in the global industrial chain (Feng et al.,2022). In recent decades, Chinese foreign trade has achieved rapid growth. ...
We address the problem of the impacts of COVID-19 pandemic on foreign trade transport by introducing a foreign trade intermodal transport accessibility (FTITA) index. First, we present the definition of FTITA, which combines the convenience of transporting domestic cargoes to overseas regions by an international intermodal transport network and the trade attractiveness of the domestic cargoes in the overseas regions. Second, we analyze the path choice behaviors of domestic shippers and propose the measurement method of the FTITA index. Finally, using the 41 cities in the Yangtze River Delta region in mainland China as origins and eight overseas regions as destinations, we empirically analyze the impacts of COVID-19 pandemic on the FTITA. With the empirical study conducted in prepandemic and postpandemic years, we analyzed the overall trends of the FTITAs from the YRD region to eight overseas regions, spatial patterns of the distributions of the FTITAs in the YRD region, rankings of average FTITA values for the top ten cities in the YRD region, and the FTITAs for different cargoes. The results indicate that the FTITAs of the YRD region in the prepandemic year are significantly higher than those in the postpandemic year. Moreover, in both the prepandemic and postpandemic years, the FTITAs to North America, Japan/South Korea, Europe, and Southeast Asia are significantly higher than those to Oceania, Middle East, South America, and Africa. Through analysis of the spatial patterns of the FTITAs across cities in the YRD region, we find that the cities with high FTITA are mainly close to Shanghai Port and Ningbo Port; the cities with middle-high FTITA are mainly located in southern Zhejiang and the regions along the Yangtze River; the cities with middle-low FTITA are mainly located in northern Jiangsu; and the cities with low FTITA are located in northern Anhui. Furthermore, comparing the impacts of COVID-19 pandemic on the FTITAs for different cargoes, we observe that COVID-19 has the least impact on foodstuffs and event cargoes. Our findings can guide decision makers in implementing policies for alleviating the impacts of COVID-19 pandemic on foreign trade transport and further promoting the sustainable development of port and shipping industries.
... The medium-high group is stronger than the medium-low group, indicating that the two groups can effectively improve their embedded position in the GVCs by accelerating the digitalization process. In addition, the interaction term models of numb and R&D have negative and positive effects at the 1% significance level for medium and high knowledge intensity groups, respectively [62]. A reasonable speculation is that the group's R&D investment is more invested in ICT, and the increase in R&D investment is conducive to magnifying this utility. ...
A country’s manufacturing industry is often an important route for national prosperity, but it is also a conduit by which a digital economy may become truly useful. This is so the deep integration of the digital economy and manufacturing industry can enhance independent innovation efficiencies, promote the development of advanced manufacturing clusters, and constantly spawn new models, forms of business, and industries. Consequently, it is crucial to improve China’s global manufacturing value chain. This article starts with an analysis of the development status and competitiveness of the digital economy in China and abroad. It establishes a structural equation and uses the latest data from the World Input-Output and Asian Development Bank databases. It introduces new variables, such as digitization, research and development (R&D) investment, and industrial scale to empirically analyze China’s manufacturing industry’s global value chain (GVC). The results show that the digitization of China’s manufacturing industry can increase the forward participation of GVC in the manufacturing industry to improve the division status of GVCs. Analyses suggest that due to insufficient R&D investment in the division of labor in the GVCs, China’s manufacturing industry is prone to low-end lock-in, inefficient industrial structures, and weak innovation ability. Consequently, the following suggestions are proposed: China’s manufacturing industry needs to accelerate digital transformation, increase R&D investment, actively participate in the division of labor in the GVCs, and enhance core competitiveness.
... The theory of competitive advantage emphasizes the key role of innovation in a country's competitive advantage (Porter, 1991). Competitive advantage is closely related to artificially created resources, so its position in the international division of labor is dynamic (Feng et al., 2022). In the international division of labor, we need to transform comparative advantage into a competitive advantage to form a real economic advantage (Shao and Li, 2013). ...
In the era of economic globalization, the competitiveness of products on a global scale is increasingly achieved through effective and sustainable strategies for brand development by the leaders. This paper conducts an empirical study on regional brand competitiveness (BC) influencing factors. A research model was proposed and tested by employing structural equation modeling. Data analysis was conducted using 214 valid questionnaires from two major producing areas in Jilin Province, China. Research results show that Brand Market (BM) and Government Guidance (GG) directly and positively impact the regional BC. Regional Resource (RR) and industrial development (ID) indirectly impact the regional BC through the mediating role of BM and GG. BM is the most important factor affecting the regional BC. Based on this, the path to improve the competitiveness of traditional agricultural products under economic globalization is determined, and targeted countermeasures and suggestions are formulated for the existing problems.
The global pharmaceutical supply chain faces mounting challenges due to shifting trade policies, escalating tariffs, and growing geopolitical tensions. This study offers a competitive risk assessment that explores how these trade-related factors impact pharmaceutical manufacturing, distribution, and accessibility. By analyzing the interplay between tariff structures and regulatory dynamics across major global actors-such as the U.S., EU, China, and India-the research highlights key vulnerabilities in the pharma supply chain. Scenario-based modeling demonstrates how tariff uncertainty and policy fragmentation can disrupt drug availability, increase production costs, and influence global competitiveness. The study advocates for harmonized trade frameworks and adaptive supply chain strategies to foster resilience and ensure continuity in global healthcare delivery.
Accepted by: M. Zied Babai
This paper examines a supply chain network focusing on the distribution of fresh agricultural products, incorporating outsourcing and stochastic demands considerations. Initially, we establish a generalized Nash equilibrium model with stochastic demands among fresh produce firms. Subsequently, we transform this model into a mixed complementarity system using the Karush–Kuhn–Tucker conditions. Utilizing the Fischer–Burmeister function, we further convert the mixed complementarity system into a set of nonlinear equations, amenable to solution via GAMS software. We conduct numerical experiments and perform sensitivity analysis on key parameters. Our findings suggest that higher subsidy rates incentivize firms towards production outsourcing, particularly benefiting low-income farmers, thereby potentially increasing profits. Moreover, market fluctuations play a pivotal role in ensuring the stability and profitability of firms, with moderate fluctuations presenting opportunities for fresh enterprises to adapt, innovate and capitalize on evolving market conditions. These results offer valuable insights for effective management of fresh produce supply chains.
In this paper, we investigate the extent to which precious metals can be used as a hedge from the perspective of global supply chain uncertainty (GSCU), which is significant for obtaining higher investment returns. This exploration uses the wavelet-based quantile-on-quantile regression (QQR) technique to identify the complex connection between GSCU and the price of precious metals (PMP). We find that GSCU has both positive and negative effects on PMP, which indicates that precious metals do not always hedge against global supply chain uncertainty, in contrast to the predictions of the theoretical model. This analysis considers multiple time scales, showing that severe GSCU can lead to a bull market in precious metals, but moderate GSCU may cause PMP to decline in the short term. However, extremely low GSCU might result in a bear market in precious metals, whereas moderate GSCU could also decrease PMP in the medium run. PMP could also be positively affected by moderate GSCU and it turns negative in the long term due to severe GSCU. A test of these results using the wavelet-based QQR technique reveals that they are robust. Because the global supply chain is strained and faces a potential crisis, our results have important implications for investment by individual investors, firms, countries, and regions.
Owing to the uncertainties of international trade and economic environment, the supply chain risks of global production networks have substantially increased in recent years. In this study, we investigate the supply disruption and international trade risks of an offshoring-based global production network using system dynamics simulation and game theory. The production network is formed by two contract manufacturers (CMs) and one original equipment manufacturer (OEM) located in different countries. First, a system dynamics simulation model considering supply disruption risk is established to evaluate the impacts of different supply disruption modes on the profit of OEM. To counteract the supply disruption risk, dynamic and static penalty mechanisms are proposed. By applying game analysis, we theoretically and numerically demonstrate why and how the dynamic penalty mechanism is superior to the static penalty mechanism. Second, we apply system dynamics and game theory to analyze the international trade risks (tariffs and exchange rates) for the offshoring-based global production network, and a cost-sharing mechanism for mitigating the trade risks is proposed. Finally, based on the study, we summarize some important managerial implications that may be helpful for practitioners.
In this paper, we develop a global supply chain network model in which profit-maximizing firms engage in competition in the production and distribution of products in the presence of quantitative trade policy instruments in the form of tariff rate quotas. Tariff rate quotas are two-tiered tariffs, in which a lower in-quota tariff is applied to the units of imports until a quota or upper bound is attained and then a higher over-quota tariff is applied to all subsequent imports. They are utilized to protect domestic producers in the case of a wide range of products, from agricultural ones to fabrics and even steel, and can be challenging to formulate. We construct the governing set of novel equilibrium conditions associated with the product flows and Lagrange multipliers, which correspond to quota rent equivalents, and derive the variational inequality formulation. Qualitative properties are presented along with an effective algorithm, which is then applied to compute solutions to numerical examples comprising an agricultural product case study on avocados and global trade. This work is the first to model and solve general, competitive supply chain network problems consisting of oligopolistic firms with multiple production sites and demand markets in multiple countries subject to tariff rate quotas.
There has been an increased interest in optimizing pricing and sourcing decisions under supplier competition with supply disruptions. In this paper, we conduct an analytical game-theoretical study to examine the effects of supply capacity disruption timing on pricing decisions for substitute products in a two-supplier one-retailer supply chain setting. We investigate whether the timing of disruption may significantly impact the optimal pricing strategy of the retailer. We derive the optimal pricing strategy and ordering levels with both disruption timing and product substitution. By exploring both the Nash and Stackelberg games, we find that the order quantity with the disrupted supplier depends on price leadership and it tends to increase when the non-disrupted supplier is the leader. Moreover, the equilibrium market retail prices are higher under higher levels of disruption for the Nash game, compared to the Stackelberg game. We also uncover that the non-disruptive supplier can always charge the highest wholesale price if the disruption occurs before orders are received. This highlights the critical role of order timing. The insights can help operations managers to proper design risk mitigation ordering strategies and re-design the supply contracts in the presence of product substitution under supply disruptions.
This article compares a normal and a reverse supply chain in the Betrand Competition. Each supply chain consists of a retailer and an exclusive supplier with stable partnership. The two chains compete with each other in three competition structures: the Centralized Competition Game, the Hybrid Competition Game (including two cases), and the Decentralized Competition Game. In different competition structures, we examine how the degree of competition intensity between the two chains and product return rate of the reverse chain influence the equilibrium decision of market price, profits of two chains and the choice of centralization. The article differs from the study of the traditional supply chain model as follows. Firstly, we analyze the normal and the reverse chain related to the same product in the Betrand competition. Secondly, the data show that the market price decreases with the rising of the product return rate and the falling of the competition intensity. Thirdly, it is found that the total profit of the normal chain decreases with the rising of the product return rate, while the total profit of the reverse chain increases with rising of the product return rate. Profits of two chains increase with the rise of the competition intensity. Finally, this article shows that centralization is an optimal strategy for one chain whereas centralization may be the best for the other chain.
This paper investigates the effect of product substitutability on Nash equilibrium distribution structures in a duopoly where each manufacturer distributes its goods through a single exclusive retailer, which may be either a franchised outlet or a factory store. Static linear demand and cost functions are assumed, and a number of rules about players' expectations of competitors' behavior are examined. It is found that for most specifications product substitutability does influence the equilibrium distribution structure. For low degrees of substitutability, each manufacturer will distribute its product through a company store; for more highly competitive goods, manufacturers will be more likely to use a decentralized distribution system.
This article was originally published in Marketing Science, Volume 2, Issue 2, pages 161–191, in 1983.
Over the past decade, the field of finite-dimensional variational inequality and complementarity problems has seen a rapid development in its theory of existence, uniqueness and sensitivity of solution(s), in the theory of algorithms, and in the application of these techniques to transportation planning, regional science, socio-economic analysis, energy modeling, and game theory. This paper provides a state-of-the-art review of these developments as well as a summary of some open research topics in this growing field.
The phenomenon of reshoring is enforced by governments in developed countries to strengthen the manufacturing industries and solve problems such as economic recession and job scarcity. Moreover, offshoring has become expensive for industries because of changes in the host countries, such as increasing labor and logistics costs and decreasing productivity. Therefore, this study formulated a supply chain model to determine whether manufacturing centers (MCs), suppliers, and reverse logistics facilities should relocate to their home country from the host country to maximize the total profit based on the level of reshoring drivers. We analyzed the effects of productivity-adjusted costs and reverse logistics on the reshoring decisions by conducting numerical experiments. First, the locations of other facilities in a supply chain network and consideration of reverse logistics can significantly influence the reshoring of the MCs. Second, reshoring can be enhanced in environments with productivity-adjusted costs depending on the characteristics of the host and home countries. Third, the effect of the reshoring policy may differ based on the process characteristics of the MCs. Therefore, companies need to adopt right-shoring strategies from the perspective of a supply chain network while considering the effect of reshoring drivers on the MCs. Furthermore, governments need to establish strategies for discriminative government budgeting based on the characteristics of the manufacturing processes and the home country when considering policies to promote the reshoring of companies.
When consumers purchase imported products through cross-border e-commerce (CBEC), they actually pay for “product + import tariff”. In practice, import tariffs include ad valorem tariff and specific tariff, where the former is levied based on the price of the product, and the latter is levied based on the quantity of the product. Tariff adjustment has been a major concern since it can be a strategic decision for the government that plays a long-term role. Consequently, in this paper, we investigate the impact of tariffs on two e-tailers’ profitability and the government's utility (measured by “social welfare + tariff revenue”) when the e-tailers sell substitutable but quality-differentiated products. We find the preference of the e-tailer selling high-end product follows a threshold policy that solely depends on the ad valorem tariff rate, while the preference of the e-tailer selling low-end product varies with the specific tariff rate, the ad valorem tariff rate, and the quality gap between high-end product and low-end product. Interestingly, we identify a quality update dilemma that distorts the e-tailers’ retail prices and sales quantities, which eventually alters their profitability performances with two tariffs. We further find that, there exist incentive alignment opportunities among the e-tailers and the government over the tariff policy, which improves the e-tailers’ profits and the government's utility in the market. These results shed light on the government adjustment of tariff type to improve the policy effectiveness, and are theoretically among the first to study the impact of tariff type in the global operations literature.
We consider the effect of tariffs and production cost on a multinational firm's incentive for backshoring under competition. The multinational firm (M) can produce in a low-cost foreign country, but her products are imposed tariffs if imported. When selling to home customers, M competes with a national firm (N). To model the two competing firms’ interactions, we adopt three common game modes: M-led or N-led Stackelberg games, and a simultaneous game. Our analytical result shows that under offshoring, M’s profit can increase in the market competition when the competition is intense, and this trend is more likely to exist when the low-cost advantage of offshoring is greater, or M becomes more powerful. Second, compared with onshoring, offshoring always hurts N but benefits home customers, and it is beneficial for M only when the tariff rate is low. Third, it is more difficult to induce M to backshore by imposing tariffs when M is less powerful. Furthermore, in a model variant, we show that under offshoring, selling through an independent domestic retailer (R) is more attractive for the multinational group (G) than selling directly when the tariff rate is high, and G’s incentive for selling through R is stronger when R is more powerful.
The Covid-19 pandemic has brought attention to supply chain networks due to disruptions for many reasons, including that of labor shortages as a consequences of illnesses, death, risk mitigation, as well as travel restrictions. Many sectors of the economy from food to healthcare have been competing for workers, as a consequence. In this paper, we construct a supply chain game theory network framework that captures labor constraints under three different scenarios. The appropriate equilibrium constructs are defined, along with their variational inequality formulations. Computed solutions to numerical examples inspired by shortages of migrant labor to harvest fresh produce; specifically, blueberries, in the United States, reveal the impacts of a spectrum of disruptions to labor on the product flows and the profits of the firms in the supply chain network economy. This research adds to the literature in both economics and operations research.
What are the attributes of the best‐performing supply chains? According to Lee (2004), the best supply chains are agile, adaptable, and ensure the interests of all participating companies stay aligned, that is, The Triple‐A framework. Fifteen years later, we find global supply chains exposed, with an increasing frequency and alarming severity, to low probability disruptive shocks. We revisit the question of the current attributes of best‐performing supply chains in a highly uncertain and risk fraught world. Using the lessons of the last 20 years, we propose a new framework, the “Triple A & R” framework, as the foundational concept for defining excellence capabilities in global supply chains. Supply chains have to enhance agility with robustness, for real‐time excellent performance across a wide‐range of risk scenarios. Adaptability has to go beyond adjustment to trends and requires the building of resilience to recover from current shocks and proactively mitigate future shocks. We need to rethink and pursue re‐alignment of incentives for a “new normal” with changing consumer preferences, new value propositions and innovative business models. We review relevant literature that supported the implementation of Triple‐A practices in the best chains, and highlight the challenges faced by them in the last 20 years. We offer an array of interesting research directions to flesh out “Triple A & R” concepts and develop practices for its effective implementation.
Supply chain has received a great deal of attention both in academia and industry. The carbon emissions from supply chain activities are the major concern, therefore, many governments have implemented carbon taxes to promote energy conservation and emission reduction. Under this background, the impact of the carbon taxes on supply chain and the related operational decisions become hot topics. This paper aimed to review the researches on supply chain management under carbon tax. First, the descriptive results and a bibliometric analysis of identified articles during 2010-2019 was presented to clarify the development in this field. Then, content analysis is conducted to classify the selected articles into facility location decisions, supplier selection and order quantity, low carbon technology choice and investment, production planning, transportation decisions, pricing decisions, joint decisions and supply chain coordination under carbon taxes. The research progress in these areas was systematically reviewed and summarized. Finally, future directions were discussed from the perspectives of problem and method.
Recently, corporate social responsibility (CSR) has been received extensive attentions in emerging markets. In this paper, we explore the impact of competition on CSR in supply chains, where the buyers strategically make CSR efforts with their common supplier to capture consumers with CSR awareness. We derive conditions for each firm’s optimal CSR efforts, strategy preferences and CSR implications in monopoly and duopoly scenarios. Compared with the monopoly scenario, the supply chain is more likely to be irresponsible and reduce the total CSR effort level in the duopoly scenario. However, the effect of competition is weakened when the competitive intensity increases.
This paper considers how research in operations management can support the development of strategies for the design and management of global supply chains. It includes a model-based statement of the problem and an overview of highlights of past research that is relevant to both theory and practice. The paper identifies opportunities for research that focus on how global supply chain modeling can inform the current debate concerning the reaction of firms to changes in government policy that are relevant to global manufacturing and logistics. This includes policy changes, such as tariffs, content requirements, taxes, and investment incentives.
The past three decades have witnessed tremendous growth of supply chain activities around the globe thanks to the lowered trade barriers and free trade agreements among countries. The global supply chain management literature developed during this time provided theoretical frameworks and decision support tools for operational and supply chain decisions in the global context. Recent development in trade barrier debates as well as increasing uncertainties in countries’ trade policies have forced companies to rethink their global operational strategies. In this short paper, we draw insights from the existing global supply chain literature and in particular, focus on interpreting recent research contributions published in Manufacturing & Service Operations Management (M&SOM) on the topic to gain understanding of the implications of trade policies, especially tariffs, for firms’ global facility network design decisions. We also provide a discussion of important dimensions that were absent from the existing literature but are pertinent to providing a richer understanding of implications of trade policies for today’s interconnected supply chains. Future research that takes into consideration those previously less explored dimensions has the potential to offer insights not only to industry practitioners but also, to the policy makers. Developing an appreciation of potential reactions from complex connected supply chains in various industries would help policy makers better anticipate the impact of trade policy change.
We introduce a supply chain network equilibrium model with differentiated products, in which firms compete on product quantities and quality. We then extend the model to include a strict quota or tariff. We establish the equivalence between the model with a strict quota and that with a tariff, when the quota constraint is tight, and the tariff corresponds to the equilibrium Lagrange multiplier associated with the constraint for the former model. Numerical examples reveal that although firms may benefit from the imposition of a quota or tariff, the welfare of consumers in the country imposing the instrument declines.
This paper presents an integrated model for time-cost competition between supply chains with heterogeneous customers. The firms in our model can offer various time options for their production/service to time-sensitive customers. This gives rise of a new concept of time-based supply chain, which we call T-chain, to be the basic element in the competition and extends the inter supply chain competition to a new dimension of time. Assuming the customers are heterogeneous in time-cost bi-criteria decision making, we integrate the discrete choice theory into supply chain network competition and formulate the equilibrium conditions as a multinomial logit based variational inequality problem. Numerical examples are presented for model illustration and managerial insights such as profit maximization for a firm who participates in this supply chain network.
This paper examines service-level and distribution channel decisions for two competing supply chains with a focus on how service competition affects the channel structure. Each manufacturer can use either an integrated channel (i.e., sells products directly) or a decentralized channel (i.e., sells products through retailers). Service can be provided by either producers (i.e., manufacturers) or sellers. We characterize the equilibrium under each service provision. We find that when manufacturers provide service, (i) symmetric decentralization is an equilibrium only when price elasticity, service cost, and service competition are low; (ii) the range in which symmetric decentralization is an equilibrium first increases and then decreases with the level of service competition; (iii) symmetric decentralization raises the service level when price elasticity is low; (iv) postponing the service-level decision reduces the range of symmetric decentralization; and (v) the impacts of key factors on channel structure equilibrium are robust to the observability of wholesale price. When service is provided by sellers, our results show that (i) symmetric decentralization is an equilibrium only when the retailer’s service cost is high and that of the manufacturer is low (otherwise, an asymmetric equilibrium may exist), and (ii) a higher service subsidy rate shrinks the symmetric decentralization range.
In this paper, we develop a unified variational inequality framework in the context of spatial price network equilibrium problems that captures world trade policies in the form of tariff rate quotas, which are two-tiered tariffs, and that have been applied in practice to numerous commodities. The spatial price network equilibrium model allows for multiple supply markets and multiple demand markets in different countries as well as multiple transportation routes. The model is qualitatively analyzed and also related to models with trade policies such as ad valorem tariffs and strict quotas. A case study on the dairy industry focusing on the United States and France is presented to illustrate the modeling and computational framework with impacts of stricter quotas, higher over quota tariffs, as well as additional transportation routes assessed. The numerical examples reveal that although domestic producers can gain under tariff rate quotas, consumers may experience higher prices. Given the relevance of tariffs to global trade in the world today and discussions concerning the impacts, the framework constructed in this paper is especially timely.
This paper captures different environmental tax policies in a multi-tiered supply chain network competition context. We derive the governing equilibrium conditions for the noncooperative game theory models for each firm and provide the equivalent variational inequality formulations. The numerical examples investigate the impacts of emission tax policies and product differentiations on the competing firms, and compare the effects of different environmental policies (flat emission tax rates, progressive emission taxes, and the government command-and-control regulations with emission standards) on equilibrium product demands, prices, total emissions, and overall firms profits. The computational results indicate that the implementation of environmental tax policies along with an increase in consumers’ environmental concerns can not only motivate the firms to perform sustainable operations, but also reduce the total carbon footprint. Furthermore, the low-cost progressive emission tax policies can be as effective as the high at emission tax rate in terms of reduction in carbon footprint. Therefore, the model developed in this paper can be used by the policymakers and the firms to evaluate the effects of different environmental tax policies in a supply chain competition context.
When selling products globally in geographically separated markets with price discrimination, manufacturers often have to compete with parallel importers (PIs) who sell “gray products,” purchasing the manufacturers’ authorized products in low-price markets and reselling them in high-price markets. In this paper, we show that manufacturers can use ex ante quality design along with distribution strategies to mitigate the negative impacts of parallel importation. We develop game-theoretic models for a supply chain with a manufacturer and a PI, in which the manufacturer needs to determine distribution structure (either selling through high-price market exclusively, or selling through two channels), product quality, and retail prices. If a dual-channel structure is selected, the manufacturer also should decide the channel opening time in the low-price market, either early or late. Our results suggest that (1) the manufacturer should strategically choose a lower quality level when designing its product to weaken the PI's competitiveness; (2) the manufacturer's optimal distribution strategy is determined by the gap between customers’ willingness to pay (WTP) in the two markets and the customer's tolerance for late consumption; and (3) parallel importation hurts the customer surplus (CS) and social welfare (SW) in the low-price market, and benefits CS and SW in the high-price market when the two markets are moderately balanced. We then consider several important extensions to provide additional insights. Firstly, we show that the appropriate marketing investment in the low market can effectively counter the PI. Secondly, we examine the impact of multiple competing PIs on the manufacturer's decisions, including distribution strategy, quality design, prices, and profit. Lastly, we find that the advertising effect may motivate the manufacturer to improve product quality and benefit both the manufacturer and PI if the effect is relatively strong.
Motivated by observations in the greater China region, this paper studies a multinational firm (MNF)'s preferences between two procurement strategies in a global business environment. The MNF relies on a contract manufacturer (CM) to produce its products, which serve both markets within (domestic market) and outside (overseas market) China. The MNF is assumed to be monopolistic in the overseas market but faces competition from a local original equipment manufacturer (OEM) who outsources both manufacturing and component procurement to the CM. The MNF will decide whether to control its component procurement (consignment strategy) or delegate that function to the CM (turnkey strategy). Our study indicates that a number of factors unique to the global supply chain environment, such as a multi-market structure with different sizes and natures of competition, and a set of tax rules that gives differential treatment to products serving different markets, have the potential of impacting the MNF's choice of consignment vs turnkey strategies, sometimes in interesting ways. In particular, we find that when attempting to balance the pros and cons of cooperating with the local OEM under turnkey while competing against it in the domestic market, the MNF's preference could switch twice from turnkey to consignment and back to turnkey, and its global profits could first decrease and then increase, as the domestic market grows. Our study also highlights the importance of making a company's global supply chain management decisions while considering international tax rules.
The Generalized Nash Equilibrium Problem is an important model that has its roots in the economic sciences but is being fruitfully used in many different fields. In this survey paper we aim at discussing its main properties and solution algorithms, pointing out what could be useful topics for future research in the field.
Many manufacturers engaging in direct sales online face channel competition and conflict with traditional retailers. This paper studies a two-staged supply chain composed of a manufacturer, a retailer, and consumers with different aesthetic preferences. The manufacturer distributes a standard product via the conventional retailer. In addition, it offers a spectrum of customized products directly online. Modeling the firms’ decisions on offering customization, we study their dependence on consumers’ acceptance level of the online channel and consumers’ fix cost. We obtain the following key findings. First, with the manufacturer offering customized products online, the Pareto improvement zone, in which both the manufacturer's and retailer's profits are improved because of alleviated vertical competition and an enlarged market, exists only under certain circumstances, and it depends on consumers’ acceptance level of the online channel and their fit cost. Second, the manufacturer's offering customized products online does not necessarily lead to a reduction in the retail price. Third, the manufacturer is more aggressive in engaging in direct sales in a decentralized supply chain than in an integrated one, because it is less interested in alleviating horizontal competition (i.e., the competition between the standard and the customized products) in the decentralized setting.
Under market demand uncertainty, we show that quotas can result in a welfare advantage over tariffs for an importing country despite that its government does not capture any quota rents. Specifically, the conditions under which an equivalent quota yields higher expected welfare than a tariff are shown to depend on a set of economic variables. These variables include the initial tariff rate, the relative efficiency in production between home and foreign firms, the probability distribution of random demand shocks that make the quota binding or non-binding under uncertainty, as well as the variance of the stochastic market demand. The analysis of this paper has welfare implications for tariffication.
The variational inequality problem has been utilized to formulate and study a plethora of competitive equilibrium problems in different disciplines, ranging from oligopolistic market equilibrium problems to traffic network equilibrium problems. In this paper we consider for a given variational inequality a naturally related ordinary differential equation. The ordinary differential equations that arise are nonstandard because of discontinuities that appear in the dynamics. These discontinuities are due to the constraints associated with the feasible region of the variational inequality problem. The goals of the paper are two-fold. The first goal is to demonstrate that although non-standard, many of the important quantitative and qualitative properties of ordinary differential equations that hold under the standard conditions, such as Lipschitz continuity type conditions, apply here as well. This is important from the point of view of modeling, since it suggests (at least under some appropriate conditions) that these ordinary differential equations may serve as dynamical models. The second goal is to prove convergence for a class of numerical schemes designed to approximate solutions to a given variational inequality. This is done by exploiting the equivalence between the stationary points of the associated ordinary differential equation and the solutions of the variational inequality problem. It can be expected that the techniques described in this paper will be useful for more elaborate dynamical models, such as stochastic models, and that the connection between such dynamical models and the solutions to the variational inequalities will provide a deeper understanding of equilibrium problems.
The Generalized Nash equilibrium problem is an important model that has its roots in the economic sciences but is being fruitfully
used in many different fields. In this survey paper we aim at discussing its main properties and solution algorithms, pointing
out what could be useful topics for future research in the field.
In this paper, we develop a supply chain network model consisting of manufacturers and retailers in which the demands associated with the retail outlets are random. We model the optimizing behavior of the various decision-makers, derive the equilibrium conditions, and establish the finite-dimensional variational inequality formulation. We provide qualitative properties of the equilibrium pattern in terms of existence and uniqueness results and also establish conditions under which the proposed computational procedure is guaranteed to converge. Finally, we illustrate the model through several numerical examples for which the equilibrium prices and product shipments are computed. This is the first supply chain network equilibrium model with random demands for which modeling, qualitative analysis, and computational results have been obtained.
We investigate contracting and information sharing in two competing supply chains, each consisting of one manufacturer and one retailer. The two supply chains are identical, except they may have different investment costs for information sharing. The problem is studied using a two-stage game. In the first stage, the manufacturers decide whether to invest in information sharing. In the second stage, given the information structure created in the first stage, the manufacturers offer contracts to their retailers and the retailers engage in Cournot competition. We analyze the game for two different contract types. For the case of contract menus, a supply chain that does not have information sharing will lower its selling quantities because of the negative quantity distortions in the contract menus, thus creating a strategic disadvantage in Cournot competition. The value of information sharing to a supply chain is positive, and the dominant strategy of each supply chain is to invest in information sharing when the investment costs are low. We fully characterize the equilibrium information sharing decisions under different investment costs. For the case of linear price contracts, the value of information sharing to a supply chain becomes negative, and the dominant strategy of each supply chain is not to invest in information sharing regardless of investment costs. Our results highlight the importance of contract type as a driver of the value of information sharing and the role of information sharing capability as a source of competitive advantage under supply chain competition.
In this paper, we study the impacts of a set of China's export-oriented tax and tariff rules on the optimal supply chain design and operations for a firm that produces its product in China and sells it in markets both inside and outside China. We develop an analytical framework to evaluate four major supply chain structures that we observed in practice. We derive the optimal supply chain decisions for each structure and investigate various business environments under which one of the structures is preferred over the others. Our analysis indicates that the ultimate purpose of a product sold in the China market (i.e., whether it will be consumed domestically or be assembled in another exported product) may have a significant impact on the structure preference. In addition, threshold values exist for several key business parameters over (or under) which certain supply chain structures are favored over others. Managerial insights based on such results are useful for multinational firms who are challenged to develop effective supply chain strategies in the region's increasingly volatile business environment.
One may define a concept of an n-person game in which each player has a finite set of pure strategies and in which a definite set of payments to the n players corresponds to each n-tuple of pure strategies, one strategy being taken for each player. For mixed strategies, which are probability distributions over the pure strategies, the pay-off functions are the expectations of the players, thus becoming polylinear forms …
We study a supply chain economy (SCE) that comprises heterogeneous SC involving multiple products and competing for multiple markets. The proposed network model is built upon operation links and interface links, representing, respectively, substantial SC operations and coordination functions between the operations. The paper presents a variational inequality formulation of the problem, the solution of which determines the winning SC and their market shares in the equilibrium of SCE. We furnish qualitative properties such as existence and uniqueness of the equilibrium. Numerical examples are presented for illustrative purpose.
Trump to sign tariffs with ‘carve-outs’
- W Chen