Double (or multiple) marginalization is often identified as the main source of a decentralized supply chain's (SC's) inefficiency. In its core lies the fact that if the agents constituting the SC choose their output prices according to the golden rule of profit maximization (that normally applies to a single firm that produces independently and sells directly to the end consumer), the prices in the SC tend to spiral up to an inefficient (equilibrium) level where both the consumer surplus and the SC's total profit are diminished. The aim of this paper is to analyze and quantify the impact of multiple marginalization on the behaviour of SC's that vary with respect to their structure (i.e. the number of agents and the links between them) and the shape of their cost and demand functions. The main gauge of this impact is the efficiency of a SC, defined as the ratio of the profit of a SC whose agents behave according to the model of multiple marginalization, and the potential profit of the SC (i.e. the maximum profit attainable under the conditions of complete coordination of prices within the chain). Besides efficiency, some other properties of a SC are studied, e.g. the distribution of the SC's profit among the individual agents or cost externalities within the SC. Three different models of multiple marginalization are studied in the paper. The first one is a linear model of multiple marginalization (i.e. a model with linear demand and cost functions); in this simplified setting we derived explicit formulae for values of the studied indicators. The second model is analogous to the first one only that it allows for non-linear demand and cost functions; in this case, the analysis is carried out using computer experiments with numeric algorithms. The last one is a dynamic model of multiple marginalization which studies the abovementioned price spiral through multi-agent simulation.
| Identifer | oai:union.ndltd.org:nusl.cz/oai:invenio.nusl.cz:77062 |
| Date | January 2005 |
| Creators | Zouhar, Jan |
| Contributors | Fiala, Petr, Cahlík, Tomáš, Ivaničová, Zlatica |
| Publisher | Vysoká škola ekonomická v Praze |
| Source Sets | Czech ETDs |
| Language | Czech |
| Detected Language | English |
| Type | info:eu-repo/semantics/doctoralThesis |
| Rights | info:eu-repo/semantics/restrictedAccess |
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