Abstract: In highly volatile demand environments, firms frequently face simultaneous capacity shortages and idle resources, necessitating effective mechanisms for dynamic capacity coordination. Capacity sharing is regarded as a key approach to address this challenge. The objective is to examine whether capacity sharing can effectively alleviate such imbalances in a supply chain network and to identify its boundary conditions and critical influencing factors. For a capacitated supply chain network, two equilibrium models are formulated based on variational inequality methods: one without capacity sharing and one with capacity sharing. The Euler method is then employed to solve the models, and their equilibrium solutions are compared to assess the effectiveness of capacity sharing in mitigating capacity shortages and resource idleness. It is found that capacity sharing is not universally effective; its performance depends on the capacity status of the sharing parties and the sharing price. A mutually beneficial outcome for both sides is achieved only when the capacity surplus firm has sufficient excess capacity, the capacity deficient firm suffers from severe shortage, and the third party sharing platform adopts an appropriate pricing strategy.