Abstract:In a competing supply chain model consisting of two manufacturers and two retailers, each manufacturer produces a substitutable product and sells to two competing retailers, which is defined as a cross sale. There are two different contracts for the manufacturers to choose: A wholesale price contract or a revenue sharing contract. The resulting contract configuration is compared and the effect of horizontal competition on contract choice in a cross sale setting is analyzed. It is found that the contract choice depends on the competition between the manufacturers as well as competition between the retailers, with the former playing a key role. When the competition degree of the manufacturers is relatively small and the negotiation on revenue sharing rate is successful, the revenue sharing contract is more valuable. Otherwise, the manufacturer and the retail trade only under a wholesale price contract.