Abstract: Fairness preference has significant effect on the operation in a supply chain. With fairness preference taken into account in this paper, a Stackelberg game model is developed for a two-level supply chain. Further, utility functions are established by introducing reference point effect. Then the effect of fairness on the supply chain partners strategies is analyzed for three cases: the retailer concerns about fairness only, the supplier concerns about fairness only, and both partners concern about fairness. Results show that fairness preference changes the revenue sharing rate and the retailers effort level. Also, fairness preference influences partners utility values in a supply chain, and the greater the fairness degree is, the more obvious the influence is.

Key words: supply chain； fairness preference； Stackelberg game, behavioral operation