Abstract: To solve the bilateral moral hazard problem caused by unfair distribution of profits, the models to optimize the distribution of project profits are established for a general contractor and for subcontractors, respectively, under multiple fair reference points. The Stackelberg game theory method is used to solve the problem through reverse reasoning and a numerical example is used to verify its effectiveness. This study analyzes the impact of absolute and relative fair reference points on the optimal profit distribution coefficient, the optimal effort of each party, and the overall profit of the supply chain, when subcontractors have different fairness concerns and bargaining power. Results show that: first, when subcontractors have a higher degree of fairness concern, they can obtain a higher profit distribution coefficient with the relative fairness concern model; second, the increase of profit distribution coefficient is gradually reduced with both fairness concern models; third, when subcontractors have both high bargaining power and a high degree of fairness concern, using the relative fairness concern model can more effectively motivate subcontractors to improve their efforts; finally, the overall benefits of a construction supply chain reach the optimal level when the bargaining power of the general contractor is equal to that of subcontractors.

Key words: construction supply chain, profit distribution, multiple reference points, fairness concern, bargaining power