Abstract: In supply chain, there are many conflicts of interest between the suppliers and the retailers during the production and selling of the products. In this paper, a twostage supply chain sets to choose one of the two cooperation modes: the central cooperation mode and the coordinate cooperation mode. In order to harmonize the interest of each side and maximize the return of the supply chain, central cooperation mode suggests that the supply chain should have a central corporation which leads cooperation among all these suppliers and retailers. However, coordinate cooperation mode suggests that all the members in the supply chain should equally negotiate about the matter of cooperation and make decision together. We introduce utility functions and income functions to compare the outcome of the two modes in the chain. As a result, when the market comes to the equilibrium the coordinate mode gains more profits for the whole than the central one. We then explain the reasons by analyzing the rationality of the conclusions. And the applications and limitations of the paper's results for other domains are discussed.

Key words: central cooperation, coordinate cooperation, market equilibrium , supply chain management