Mixed competition and horizontal shareholding in competing supply chains

Abstract

We consider two‐tier competing supply chains wherein downstream firms are engaged in mixed (Cournot–Bertrand or Bertrand–Cournot) competition and one downstream firm horizontally holds the rival firm's profit. Our results show that the type of mixed competition plays a crucial role in determining pricing and quantity decisions. The acquiring supply chain member's profit may be lower than the rival chain in Cournot–Bertrand retail competition. However, in Bertrand–Cournot retail competition, the upstream firm's profit of acquired supply chain is always higher, but the downstream firm's profit may be lower than the acquiring supply chain.