Supply chain competition models with strategic customers considering sales effort

This paper introduces sales effort into the supply chain competition model when facing strategic customers. A comparison analysis is proposed to show the decision differences between two sales-effort modes, i.e., the supplier conducts sales effort and the retailer conducts sales effort. Supply chain members have different tendencies toward these two sales-effort modes at different wholesale prices. We find that there is a wholesale price region where neither the supplier nor the retailer is willing to conduct sales effort. Then, we introduce the cost-sharing contract to settle this problem. Pareto improvements can be achieved after a reasonable design of the cost-sharing contract. We also find that there exist some conditions under which both the supplier and the retailer are willing to actively conduct sales effort when the cost-sharing contract is introduced.