Coordination for “company + farmer” contract-farming supply chain under Nash negotiation model

LIN Qiang, YE Fei

Systems Engineering - Theory & Practice ›› 2014, Vol. 34 ›› Issue (7) : 1769-1778.

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Systems Engineering - Theory & Practice ›› 2014, Vol. 34 ›› Issue (7) : 1769-1778. DOI: 10.12011/1000-6788(2014)7-1769

Coordination for “company + farmer” contract-farming supply chain under Nash negotiation model

  • LIN Qiang, YE Fei
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Abstract

In this paper, we investigate a contract farming supply chain consisting of an agribusiness firm and a farmer for the production and supply of agricultural products, where the farmer determines the production quantity by taking into account of the wholesale price set by the agribusiness firm and the likely uncertainty of the natural condition during the growing season, while the agribusiness firm determines the wholesale price and the retail price by taking into account of the yielded agricultural products and the likely uncertainty of market demand. The agribusiness firm's and the farmer's optimal decision making behaviors under centralized and decentralized supply chain are analyzed. The results show that the predominance of the agribusiness firm will gain most of the agricultural supply chain's revenue, and the popular protection price contract can not prevent the opportunist behavior of the agribusiness firm during the declining market situation. Therefore, we develop a kind of revenue sharing contract mechanism based on Nash negotiation model to facilitate coordination between the two parties. In addition, the proposed revenue sharing mechanism can not only coordinate the agricultural supply chain of "company + farmer" contract-farming perfectly, but also increase in the social welfare.

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agricultural supply chain / contract-farming / Nash negotiation model / revenue sharing

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LIN Qiang , YE Fei. Coordination for “company + farmer” contract-farming supply chain under Nash negotiation model. Systems Engineering - Theory & Practice, 2014, 34(7): 1769-1778 https://doi.org/10.12011/1000-6788(2014)7-1769

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