Impacts of horizontal mergers on dual-channel supply chain

Xi Zhao; Teng Niu

doi:10.3934/jimo.2020173

Article Contents

2022, Volume 18, Issue 1: 655-680. Doi: 10.3934/jimo.2020173

This issue Previous Article Bargaining in a multi-echelon supply chain with power structure: KS solution vs. Nash solution Next Article Parallel-machine scheduling in shared manufacturing

Impacts of horizontal mergers on dual-channel supply chain

Xi Zhao and
Teng Niu^,

College of Management and Economics, Tianjin University, Nankai District, Tianjin 300072, China

^* Corresponding author: Teng Niu
^* Corresponding author: Teng Niu

Received: December 31, 2019

Revised: July 31, 2020

Early access: December 2020

Published: January 2022

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Abstract

This paper investigates the impacts of horizontal mergers on a dual-channel supply chain given the rapid development of e-commerce. Three types of horizontal mergers are considered in a dual-channel supply chain consisting of three firm types: suppliers, single-channel retailer, and dual-channel retailer. A comparison with a benchmark pre-merger scenario underscores the impacts of each horizontal merger on firms in the dual-channel supply chain. First, where horizontal mergers occur (i.e., at upstream or downstream tier) has an impact on firms in the dual-channel supply chain. Second, synergy costs trigger the domination of the synergy effect. Third, the degree of consumer preference for channels affects the trigger due to which the synergy effect outweighs the competitive effect. Although dual channels prevail in supply chain management, few studies pay attention to horizontal mergers in this context. Unlike literature on horizontal mergers in single-channel supply chains, we suggest that the impacts of horizontal mergers in dual-channel supply chains have unique features, and channel preference plays an important role in such impacts.

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Mathematics Subject Classification: Primary: 91B42, 91B54; Secondary: 91A06.

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Figure 1. The structure of a dual-channel supply chain

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Figure 2. The structure of an upstream merger

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Figure 3. The structure of a SS merger

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Figure 4. The structure of a DS merger

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Figure 5. Aggregate effect of the upstream merger on the profits

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Figure 6. Aggregate effect of the SS merger on the profits

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Figure 7. Aggregate effect of the DS merger on the profits

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