Coordination of a supply chain with loss-averse consumers in service quality

Abstract

We develop a two-period game model to study the coordination mechanism for a supply chain with loss-averse consumers who are assumed to have dwindling sensitivity to service quality gain relative to loss. We find that all-unit quantity discount coupling with service subsidy rate can coordinate the retailer’s price and service quality decisions together in each period. When consumers become more loss-averse in service quality, the coordinated wholesale price in the first period might increase; whereas that in the second period decreases. With Pareto coordination mechanism, larger loss-aversion might weaken the supplier’s bargaining power. We provide managerial insights on how to adjust the coordinated contract when the consumers’ loss-aversion and reference value of service quality level change.

Cite this work

No public copy is stored for this record, so only the metadata is cited.

Stored only when both papers are in the corpus — 49 citations exist upstream.

Papers that cite the same references — the relational fallback while embeddings are still backfilling.