Price Competition of Supply Chains under Demand Uncertainty

We study the price competition of two supply chains with demand uncertainty. Each supply chain consists of one risk-averse manufacturer and one risk-averse retailer. We consider two cases: two competing decentralized supply chains and two competing integrated supply chains. We analyze the effects of the demand uncertainty on the supply chains’ expected profits. In the first case, we find that the expected profit of one supply chain is first increasing and then decreasing with the demand uncertainty of him, otherwise decreasing with the demand uncertainty of his rival. In the other case, we show that the more uncertain the demand of one supply chain, the lower expected profit of him and the rival’s will be.