In the presence of government procurement, one important driving force behind a poor farmer entering into sales format agreements is to improve profits. In this study, the authors examine two widely used sales formats, namely resale format and agent format, to investigate how parameters influence the optimal sales format selection and decision equilibriums of supply chain members under the scenarios with or without the buyer's poverty alleviation efforts.
This paper adopts the Stackelberg game-theoretical approach to examine the interactions between the farmer from poor/rural areas and the buyer.
The authors find that under certain conditions, the optimal sales format of the poor farmer and buyer can be consistent, which eliminates conflicts in the sales format selection. In addition, with the buyer's poverty alleviation effort, the poor farmer and buyer can achieve the Pareto improvement, which is a win–win outcome for them. The authors also find that the market price in government procurement is independent of competition, which is consistent with practical observations.
It is the first study to investigate the optimal sales format selection given government procurement as a poverty alleviation effort which is in competition with a firm's regular channel.
