No abstract

This paper studies the effect of risk-aversion in the competitive newsvendor game. Multiple newsvendors with risk-averse preferences face a random demand and the demand is allocated proportionally to their inventory levels. Each newsvendor aims to maximize his expected utility instead of his expected profit. Assuming a general form of risk-averse utility function, we prove that there exists a pure Nash equilibrium in this game, and it is also unique under certain conditions. We find that the order quantity of each newsvendor is decreasing in the degree of risk-aversion and increasing in the initial wealth. Newsvendors with moderate preferences of risk-aversion make more profits compared with the risk-neutral situation. We also discuss the joint effect of risk-aversion and competition. If the effect of risk-aversion is strong enough to dominate the effect of competition, the total inventory level under competition will be lower than that under centralized decision-making.2010 Mathematics Subject Classification. Primary: 90B05; Secondary: 91A80.

<p style='text-indent:20px;'>This paper studies a multi-echelon serial supply chain with negotiations over wholesale prices between successive echelons. Two types of bargaining systems with power structures are compared: one adopts the generalized Kalai-Smorodinsky (KS) solution and the other adopts the generalized Nash solution. Our analyses show that, for any KS bargaining system with a given bargaining power structure, there is a Nash bargaining system with another bargaining power structure, such that the two systems are the same. However under the same power structure, the generalized KS solution results in lower wholesale price and higher total supply chain profit than the Nash solution does. Finally, we characterize the necessary and sufficient condition of the bargaining power structure under which the KS bargaining system Pareto dominates the Nash bargaining system, and the set characterized by such condition does not shrink to an empty set as the number of echelons increases to infinity.</p>