Game theory has become an essential tool in the analysis of supply chains with multiple agents, often with conflicting objectives. This chapter surveys the applications of game theory to supply chain analysis and outlines game-theoretic concepts that have potential for future application. We discuss both non-cooperative and cooperative game theory in static and dynamic settings. Careful attention is given to techniques for demonstrating the existence and uniqueness of equilibrium in non-cooperative games. A newsvendor game is employed throughout to demonstrate the application of various tools.

As has been noted in other reviews, Operations Management has been slow to adopt GT. But because SCM is an ideal candidate for G-T applications, we have recently witnessed an explosion of G-T papers in SCM. As our survey indicates, most of these papers utilize only a few G-T concepts, in particular the concepts related to non-cooperative static games. Some attention has been given to stochastic games but several other important areas need additional work: cooperative, repeated, differential, signaling, screening and Bayesian games