STUDIES ON HORIZONTAL COMPETITION AMONG HOMOGENOUS RETAILERS THROUGH AGENT-BASED SIMULATION

1. Introduction A supply chain is a network composed osuppliers, manufacturers, retailers, etc., whichcooperate to offer a kind of goods or servicesThese supply chain members cooperate andcompete with each other to maximize theiown profits. For example,…

Studies on horizontal competition among homogenous retailers through agent-based simulation

This paper adopts agent-based simulation to study the horizontal competition among homogenous price-setting retailers in a one-to-many supply chain (a supply chain consists of one supplier and multiple retailers). We model the supplier and retailers as agents, and design their behavioral rules respectively. The results show that although the agents learn individually based on their own experiences, the system converges asymptotically to near Nash equilibrium steady states. When analyzing the results, we first discuss the properties of these steady states. Then based on these properties, we analyze the effects of the retailers’ horizontal competition on the retail prices, retailers’ profits and supplier’s revenue. This work was supported partly by the National Science Foundation of China (NSFC) under Grant No. 70231010 and 70321001. Ming Xie is currently a Ph.D. candidate at School of Economics and Management, Tsinghua University. He received the B.S. degree in management information systems in 2000 from School of Economics and Management, Tsinghua University. His research interests include supply chain management, agent-based simulation and complex systems. Jian CHEN is Professor and Chairman of the Management Science Department and co-director of the Research Center for Contemporary Management, Tsinghua University. He has over 80 papers published in some leading international journals and first class Chinese journals, and has been a principal investigator for over 20 grants or research contracts with National Science Foundation of China, governmental organizations, and companies. His main research interests include supply chain management, E-commerce, modeling and control for complex systems, decision support systems and information systems, and forecast and optimization techniques. He serves as associate editor of the “IEEE Transactions on Systems, Man and Cybernetics: Part A” and “IEEE Transactions on Systems, Man and Cybernetics: Part C”, and on the Editorial Board of “The International Journal of Electronic Business” and “System Research and Behavioral Science”. He is the recipient of the Outstanding Contribution Award of IEEE Systems, Man, and Cybernetics Society in 1996, and the Young Scientist Award of China in 1992. He was Secretary General of the 1996 IEEE International Conference on Systems, Man, and Cybernetics in Beijing, Co-chair of the IPC of 1998 International Conference on Systems Science and Systems Engineering, Chair of the First Asian eBiz Workshop in 2001, Co-chair of the Asian cBiz Workshop in 2002 and 2003, and Co-chair of the international conference on Global Supply Chain Management in 2002.