Research the effect of anticipated regret and fairness concerns on retailer-led supply chain

Abstract

Considering the consumer’s anticipated regret caused by price discount, the impact of anticipated regret and manufacturers’ fairness concerns on pricing and profits is explored, and a revenue-sharing contract to optimize the profits of supply chain is explored. In centralized decision-making model with manufacturer’s fairness neutrality and retailer-led decentralized decision-making model with the manufacturer’s fairness concerns, numerical simulation and model comparison is used to analyse regret sensitivity coefficient, consumer heterogeneity, the fairness concern coefficient on pricing decisions and profit coordination. Our results reveal that consumer’s anticipated regret has a negative impact on product prices, retailer’s profit and manufacturer’s profit. Manufacturer’s fairness concerns also increase product price and reduce profits of all parties. Retailer-led supply chain can share the revenue to achieve Pareto optimization. When formulating promotional strategies, retailers should consider the characteristics of anticipated regrets of consumers.