The impact of dual fairness concerns on bargaining game and its dynamic system stability

This paper introduces dual fairness concerns into the classic two-level supply chain consisting of the fairness neutral supplier and fairness concerned retailers. The bargaining process is modeled under both simultaneous and sequential game to analyze the different situation of fairness concerns. The impact of dual fairness concerns is considered comprehensively on both short-term and long-term games. In short-term game, we conduct a sensitivity analysis on the optimal decision in a single cycle and find that the bargaining power and distributional fairness concern has opposite effects on the optimal solutions. Similarly, the impact of dual fairness concerns on that is also opposite. In long-term game, the dynamic system is constructed to investigate the influence of dual fairness concerns on system stability. At last, comparing the performance of the supplier and retailers, this paper explores the supplier’s timing choice based on the equilibrium point. The comparison shows that sequential game is more beneficial to the supplier because peer-induced fairness concern exacerbates the internal friction of retailers.