Monopoly supplier's negotiation strategy and its impact on supply chain efficiency

We set up a two-stage supply chain and raise several different bargaining game models between monopoly supplier and manufacturers under non-cooperation state. By backward induction method, we solve the equilibrium solutions of monopoly supplier and manufacturers. We compare with their profit under different bargaining mode, and find there is a pricing strategy that can improve the efficiency of whole supply chain system. The pricing strategy is that monopoly supplier negotiates only with the leader of manufacturers and makes a unique price of its product to all of the manufacturers. Under this pricing strategy, the profit of supply chain system will be close to the profit of ideal state. Meanwhile, we also analyze the influence of manufacturers' cost difference to noncooperation equilibrium state. If the cost difference of two manufacturers is disparate, the market will appear the stable noncooperation equilibrium state. If the cost difference is close, manufacturers will contest the right of bargaining with monopoly supplier in the short -term.