Price and Logistics Service Based Competitions in Two e-Commerce Supply Chains

The intensity of competition is a very important concept in the analysis of supply chain competition models. In academic articles, there were different ways to illustrate the competition intensity in different competition environments This paper studies an e-commerce sales system in which two competing supply chains supply two substitutable products to a common consumer market. Each supply chain is consisting of one supplier and one exclusive retailer. We assume that two retailers are competing on sales prices while two suppliers are competing on strategic choices of the logistics service level. Given these assumptions, this investigation shows that supply chains’ equilibrium prices, demands, service levels and profits depend on products’ intrinsic basic demands, production costs and service level developing efficiencies, respectively. Furthermore, the relationships between the average logistics service level(and also average industry price) and competition intensity are characterized.