Vertical integration with endogenous contract leadership: Stability and fair profit allocation
We study vertical integration in serial multi-tier supply chains. We consider a situation where the contract leader may be endogenously changed. A cooperative game is formulated to analyze the stable profit allocations in such a situation. The vertical integration is stable only when all members are pessimistic. The grand coalitions profit must be allocated more to the retailer and the members with higher costs.
vertical integration cooperative game leader position core allocation economics