Management Review

›› 2019, Vol. 31 ›› Issue (9): 266-277.

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Power Structure for Pharmaceutical Dual-channel Supply Chain under Price Cap Policy and Public Welfare

Li Shiyang1,2, Dan Bin1,2, Li Hongxia3, Zhang Haiyue1,2   

  1. 1. School of Economics and Business Administration, Chongqing University, Chongqing 400044;
    2. Chongqing Key Laboratory of Logistics at Chongqing University, Chongqing 400044;
    3. College of Management, Chongqing University of technology, Chongqing 400054
  • Received:2017-01-03 Online:2019-09-28 Published:2019-09-29

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Abstract:

Taking the price cap policy and the public welfare of medical institutions into consideration, we establish two Stackelberg game models, which are dominated by the medical institutions and pharmaceutical supplier respectively. Then we analyze the impacts of price cap policy and public welfare of medical institutions on the equilibriums. By comparing the equilibriums under two kinds of different power structures, we illustrate the impacts of different power constructs on supply chain performance and social welfare. The studies show that under the medical institutions dominated model, the price cap policy limits the medical institutions price, while has no impact on online price. Under the pharmaceutical supplier dominated model, the price cap policy limits both the online price and medical institutions price. Under the constraint of price cap, decreasing the price cap can improve both the supply chain profit and public welfare of medical institutions in the medical institution dominated model, while in the pharmaceutical supplier dominated model, decreasing the price cap can only improve the public welfare of medical institutions. Without the constraint of price cap, increasing public welfare of medical institutions not only increases the pharmaceutical supply chain profit, but also increases social welfare under two kinds of different dominated models. Comparing with the medical institutions dominated model, the pricing of pharmaceutical of medical institutions and supply chain profit are lower than those in the pharmaceutical supplier dominated model, while the patient's surplus is higher.

Key words: pharmaceutical, dual-channel supply chain, public welfare of medical institutions, price cap policy, power structure