Alliance formation among perfectly complementary suppliers in a price-sensitive assembly system推荐.pdfVIP

MANUFACTURING SERVICE informs OPERATIONS MANAGEMENT ® Vol. 12, No. 3, Summer 2010, pp. 527–544 doi 10.1287/msom.1090.0283 issn 1523-4614 eissn 1526-5498 10 1203 0527 © 2010 INFORMS Alliance Formation Among Perfectly Complementary Suppliers in a Price-Sensitive Assembly System Shuya Yin Paul Merage School of Business, University of California–Irvine, California 92697, syin@ Independent parties that produce perfectly complementary components may form alliances (or coalitions or groups) to better coordinate their pricing decisions when they sell their products to downstream buyers. This paper studies how market demand conditions (i.e., the form of the demand function, demand uncertainty, and price-sensitive demand) drive coalition formation among complementary suppliers. In a deterministic demand model, we show that for an exponential or isoelastic demand function, suppliers always prefer selling in groups; for a linear-power demand function, suppliers may all choose to sell independently in equilibrium. These results are interpreted through the pass-through rate associated with the demand function. In an uncertain demand model, we show that, in general, the introduction of a multiplicative stochastic element in demand has an insignificant impact on stable coalitions and that an endogenous retail price (i.e., demand is price sensitive) increases suppliers’ incentives to form alliances relative t