Work

Capacity Sharing Strategy With Sustainable Revenue-sharing Contracts

Year: 2021

Type: article

Abstract: This paper develops a duopoly model to analyse capacity sharing strategy and the optimal revenue-sharing contract under a two-part tariff and examines the effects of capacity sharing, cost, and sharing charges in three scenarios. The paper uses the two-part tariff method and adds a more realistic assumption of incremental marginal costs to improve the research on capacity sharing strategies. The results show that capacity constraints affect the sustainable development of firms. A sustainable revenue-sharing contract can create a win-win situation for both firms and promote capacity sharing. Capacity sharing, cost, and the revenue-sharing rate have different impacts in different scenarios; the optimal revenue-sharing rate and fixed fee can be determined to maximise the profits of firms that share capacity. However, capacity sharing may not improve social welfare.

Source: Technological and Economic Development of Economy

DOI: 10.3846/tede.2021.16030

Authors: Junlong Chen, Jiayan Shi, Jiali Liu

Institutions: Northeastern University, Jilin University

Language: English

Topic: Supply Chain and Inventory Management

Subfield: Management Science and Operations Research

Field: Decision Sciences

Domain: Social Sciences

SDG: Industry, innovation and infrastructure

Open Access status: gold

Estimated APC paid: $727