Price Decision Models of a Manufacturer-retailer Supply Chain Based on Game Theory

This paper focuses on the pricing decision problem of a two-echelon supply chain consisting of one manufacturer and two retailers in which the manufacturer acts as a leader. The price decision models are developed by considering the sensitivity of the retail quantity to the wholesale price of the manufacturer and the sale prices of the retailers. The optimal decisions are discussed and analyzed under retailers' different game behavior: Cournot, Collusion and Stackelberg. The research indicates that the duopolistic retailers could charge the highest price to customers and gain the greatest profit in the Collusion solution and it is reverse in the Cournot solution, but the leader's profit may be fewer than the follower in the Stackelberg situation