Managing Competition from Within and Outside: Using Strategic Inventory and Network Externality to Combat Copycats
研究品牌供应链如何利用下游零售商的战略库存和网络外部性，同时应对内部双重边际化与外部仿冒品竞争，发现两者在提升供应商收益时互补，但在高库存成本与弱网络外部性下对零售商可能替代。
Problem definition: Prior studies have identified the role of downstream retailers’ strategic inventory in mitigating double marginalization within decentralized supply chains. Our work adds to this literature by introducing two relevant features that naturally appear in a dynamic environment: network externality and copycatting. We demonstrate how strategic inventory and network externality can be used to manage competition from within and outside the supply chain. Methodology/results: We develop a game-theoretical model to capture the strategic interaction within a brand-name supply chain, which enjoys positive externalities from early-period sales but faces competition from copycats in later periods. We show that copycats, on the one hand, deter the retailer’s strategic inventory by exerting external competition and on the other hand, can amplify the benefit of the retailer’s strategic inventory in allaying internal double marginalization and enhancing the supply chain’s external competitiveness. We further show that network externality, on the one hand, brings immediate gains to the supply chain’s external battle with copycats and on the other hand, creates internal inefficiency in the form of cross-period double marginalization best exhibited under the supplier’s dynamic contract. When network externality and strategic inventory are optimized jointly, we find that they are always complementary in increasing the supplier’s payoff but can be substitutive to the retailer under a large inventory cost and weak network externality. Managerial implications: Our work provides firms ways of managing decentralized supply chains in the face of copycats. We propose strategic inventory and network externality to combat copycats and provide normative guidance on their operating mechanisms. Funding: C. Jin received financial support from the Singapore Ministry of Education Academic Research Fund [Tier 1 Grant 251RES2101]. Y.-J. Chen received financial support from Hong Kong RGC [Grants GRF 16500821 and HKUST C6020-21GF]. Supplemental Material: The online appendix is available at https://doi.org/10.1287/msom.2021.0182 .