Vertical integration or outsourcing to agents? A game theory analysis of door-to-door transformation strategies for liner companies in an asymmetric competitive environment

Motivated by the industry-wide shift toward vertical integration and the global imperative of the blue economy transition toward door-to-door logistics, this study focuses on market entry issues in an asymmetric competitive environment. A duopoly game model is built, with an incumbent first-mover with a fully integrated supply chain and a follower that enters the door-to-door market by outsourcing its inland logistics to a third-party logistics provider. This study analyzes three strategic scenarios: the unilateral integration benchmark scenario, the follower outsourcing entry scenario, and the leading firm's strategic defense through service investment. The results demonstrate several important findings. First, the impact of the leading firm's strategic service investment on the follower's profits exhibits significant non-monotonicity. When the service level is low, the market squeezing effect dominates, suppressing the follower's profits; however, when the service quality exceeds a specific threshold, the leading firm's strategic focus shifts to the high-end market segment, triggering the competition softening effect, thereby releasing the survival space for the outsourcing follower. Second, the competitive landscape would inevitably shift from the early monopolistic and exclusionary situation to an asymmetric coexistence. Third, the environmental analysis confirms that the door-to-door transformation can reduce environmental pollution. The conclusions of this study provide theoretical support and management suggestions for different-sized liner companies to make asset allocation and market entry decisions in the dynamic market.