Helper Mode Analysis in a Supply Chain : Based on Supermodular Game Theory

Consider a supply chain involving an independent supplier and an independent manufacturer, the manufacturer will help his supplier to invest in cost-reducing innovation. Based on the theory of supermodular games, we analyze two helper modes. The existence of pure strategy Nash equilibrium was proved by construction of potential function. The characteristics of the equilibrium were analyzed for simultaneous competition. We also prove that cooperating in effort decision will lead to a higher effort and higher profit for every player based supermodular games theory.