Abstract With regard to the increase of countervailing power in the supply chain, this study investigated the optimal decision of vertical structure of competitive supply chain under the background of countervailing power by constructing a vertical structure model consisting of two manufacturers and two exclusive retailers. It was found that from the manufacturers' point of view, the optimal decision of vertical structure depends on the countervailing power and the degree of competition. When the countervailing power is large, the optimal vertical structure is vertical integration; when the buyer countervailing power is small, the optimal vertical structure depends on the degree of price competition. If the degree of competition is greater than a threshold, the optimal vertical structure is vertical separation. Otherwise, it is vertically integrated. However, from the perspective of the performance of the whole supply chain, the optimal vertical structure is always vertical separation, regardless of the size of countervailing power as well as the degree of competition.
2016, Vol. 13 
