Manufacturer’s equity financing in the presence of competitive heterogeneous supplier
研究制造商在面临两个质量不同的供应商时，如何通过股权融资影响供应链决策，发现向高质量供应商提供股权融资能提升制造商、供应商、消费者剩余和社会福利。
We examine a two-tier supply chain with two financially constrained suppliers providing quality-differentiated components to a manufacturer. The manufacturer assembles these components into two products of different qualities. Besides bank loans, suppliers can receive equity financing from the manufacturer. Our study reveals several key findings. First, with bank financing, demand for both products increases as the low-quality supplier’s component quality improves; with equity financing, demand for the manufacturer’s product using the unfunded component may decrease. Moreover, a higher equity financing ratio benefits the manufacturer and the funded supplier, but reduces the unfunded supplier’s profit. Second, the manufacturer tends to provide equity financing to the high-quality supplier, who is also willing to accept. In this scenario, the manufacturer, high-quality supplier, consumer surplus and social welfare all benefit. Finally, focusing on equity financing from the manufacturer to the high-quality supplier, we find that the value of equity financing increases as the degree of product differentiation decreases; however, this value increases with the bank loan interest rate and unit production cost only when the equity financing ratio is high. This study provides insights for manufacturers to make investment decisions in the presence of quality difference.