Abstract: A kind of supply chain with two retailers and a common supplier is considered.In such a supply chain,the demands could be stimulated by the improvements of both supplier’s technology (quality) level and the retailers’ service quality.For the supply chain considered,it identifies the strategies with which a merger can increase or decrease the combined net worth of the two retailers.To maximize the profits of both the retailers and supplier,it takes investment efficiency parameter as control.For three strategies:1) the supplier acts as Stackelberg leader; 2) the retailers act as Stackelberg leader; and 3) Nash,the optimal parameter threshold is determined such that a retailer can make the decision whether to merger or not.The synergetic impacts among multiple retailers on the threshold are also analyzed.  

Key words: demand stimulation by investment, retailer, merger and acquisition strategy