Abstract: With the rapid development of the customer-oriented and experience economy, retail giants such as Amazon and Wal-Mart, which are closest to the end consumers, have rapidly dominated their supply chains, and obtained the power of wholesale pricing of products. This kind of supply chain which dominant the capital, information, and channels of the supply chain is called as "retailer-led supply chain". In the retailer-led supply chain, the upstream members are mainly small and medium-sized manufacturers in a weak position, which is often characterized by diseconomies of scale in production. The dominant retailer may encroach on the profits of the manufacturers in order to gain more share of the profits. The two sides will inevitably have conflicts due to the distribution of profits. People attach great importance to fairness preference in the transaction process, and fairness is an important factor to maintain cooperation. Taking the partner's profits as a fair reference, a utility model considering the disadvantageous inequality of the manufacturers, and the advantageous inequality of the retailor is built. In this paper, the influence of the production diseconomies of the manufacturer, the shift in the wholesale pricing power from the manufacturer to the retailer, and the fair preferences of one side/both sides of the upstream and downstream firms on the supply chain equilibrium decision-making and operational efficiency are studied.
The main work in this paper includes the following three parts. First, the equilibrium decision of supply chain without considering the fair preference of retailers and manufacturers as a comparative benchmark is investigated. Second, the optimal decision-making and utility of each member of the supply chain under the three conditions are explored:only the manufacturer with fair preference, only the retailer with fair preference, and both with fair preference. The influence of the member enterprises' fair preference on the optimal decision-making behavior and utility of the supply chain is also discussed. Finally, the numerical analysis results confirm the above conclusion.
The results show that, first, compared with the optimal output when supply chain members have no fair preference, the optimal output when supply chain members have fair preference (three preferences) is higher, and the efficiency of supply chain is improved, furthermore, under certain conditions, the wholesale price contract can achieve coordination of the supply chain. Second, the fairness preference of both parties has the most significant influence on the optimal decision and utility of each member enterprise in the supply chain. Third, there may not be a simple linear relationship between the optimal decision (or utility) of each member enterprise in the supply chain and the equity preference coefficient of upstream and downstream enterprises, but the specific factors should be closely related to the price sensitivity of consumers and the production cost of manufacturers.

Key words: retailer-led supply chain, fair preference, wholesale pricing power, diseconomies of scale, equilibrium decision