Retail outsourcing strategy in Cournot & Bertrand retail competitions with economies of scale

<p style='text-indent:20px;'>This paper investigates a manufacturer's retail outsourcing strategies under different competition modes with economies of scale. We focus on the effects market modes, scale and competitor's behavior decisions, then we develop four game models three modes. Firstly, find channel structure where both manufacturers choose cannot be an equilibrium Cournot competition. The mode is less profitable to firm than Bertrand when products are complements. Secondly, hybrid Cournot-Bertrand mode, there only one supply chain neither manufacturer chooses outsourcing, substitutability complementarity levels not sufficiently high. In addition, setting price (quantity) contracts as strategic variables dominant strategy for direct-sale who provides complementary (substitutable) products. Thirdly, competitive firms will benefit from situation they same mode. When substitutes (complements), them (Bertrand) Finally, show that have little impact but great equilibrium.</p>