Impacts on the Performance of Decentralized Supply Chain with Competing Retailers: The Principal-Agent Perspective

It'll damage the performance of the system if the retailers' sales effort level cannot be seen in the decentralized supply chain. A principal-agent model based on game theory, etc, is constructed to analyze the impacts of the retailers' competitive behavior on the performance of the system. The results show if information is symmetrical: (i) neither the performance of the system nor the game players' behalf is affected by the competition; (ii) the retailers sell the products at the price which is the same as the wholesale price; and if information is asymmetrical: (iii) the retailers have to enhance the sales effort level to gain the optimal earnings because of their competition, and this improves the performance of the system, whereas the supplier gains the whole new added profit; (iv) the more intense the competition is, the more the new added profit will be, yet the more market risk the retailers must undertake; (v) though the performance of the system is lower than that under information symmetry, it's better than that under the retailers' non-competing.