Manufacturers Gain Bargaining Power, Leaving Retailers with Diminished Profits in Supply Chains
The article delves into how companies in a supply chain make deal decisions when there are risks and investments involved. The researchers used a game to simulate this bargaining process and discovered that when one party has more bargaining power, they tend to keep it to themselves. However, if the other party has vital info, they can still make money. The best setup found was when the stronger company held the power but protected the weaker one's profits. They also saw that as technology improves, power shifts more to the stronger company. In a test scenario, these theories were seen in action.