Price and Quality Decisions in a Co-opetitive Supply Chain Considering Two-Dimensional Consumer Preferences

Co-opetition is a crucial strategy in modern supply chains. In this study, we investigate the price and quality decisions in a co-opetitive supply chain considering two-dimensional customer preferences. The supply chain comprises a key component supplier and an OEM, where the supplier decides whether to enter the end market. The Stackelberg game is employed to examine the optimal decisions of supply chain members. Through comparative analysis, we find that when the supplier’s quality cost coefficient is low, a higher proportion of price-sensitive consumers leads to an increase in the OEM’s final product price. In addition, the supplier consistently benefits from entering the end market and forming a co-opetitive relationship with the OEM. However, this market entry benefits the OEM only when the product substitutability is low and the supplier’s quality investment efficiency is relatively low. The results of this study provide guidance for market practices among supply chain participants.