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The manufacturer first sets the wholesale price, after which the two firms engage in one of three quantity competition games: a simultaneous\u2010move game, a manufacturer\u2010as\u2010leader game, or a retailer\u2010as\u2010leader game. We investigate how production economies or diseconomies of scale influence the quantity leadership and followership decisions of supply chain parties. We find that stronger economies of scale may hurt both the manufacturer and the retailer, while stronger diseconomies of scale can improve profitability for both parties. The quantity leadership structure plays a critical mediating role in these effects. We also show that a retailer leadership equilibrium emerges endogenously when diseconomies of scale are present or when the level of economies of scale is sufficiently low, whereas a manufacturer leadership equilibrium prevails when the level of economies of scale is high. Furthermore, we show that endogenous leadership choices, particularly when the manufacturer becomes the leader, can reduce consumer surplus and social welfare. These findings offer managerial implications for strategic decisions in dual\u2010channel supply chain management.<\/jats:p>","DOI":"10.1111\/itor.70187","type":"journal-article","created":{"date-parts":[[2026,3,18]],"date-time":"2026-03-18T07:48:43Z","timestamp":1773820123000},"page":"3975-4004","update-policy":"https:\/\/doi.org\/10.1002\/crossmark_policy","source":"Crossref","is-referenced-by-count":1,"title":["Quantity leadership in dual\u2010channel supply chains with production economies or diseconomies"],"prefix":"10.1111","volume":"33","author":[{"given":"Jinru","family":"Feng","sequence":"first","affiliation":[{"name":"School of Business Administration, Faculty of Business Administration Southwestern University of Finance and Economics  Chengdu 611130 China"}],"role":[{"vocabulary":"crossref","role":"author"}]},{"ORCID":"https:\/\/orcid.org\/0000-0001-7515-9591","authenticated-orcid":false,"given":"Wei","family":"Li","sequence":"additional","affiliation":[{"name":"School of Business Administration, Faculty of Business Administration Southwestern University of Finance and Economics  Chengdu 611130 China"}],"role":[{"vocabulary":"crossref","role":"author"}]},{"ORCID":"https:\/\/orcid.org\/0000-0002-8755-2857","authenticated-orcid":false,"given":"Jing","family":"Chen","sequence":"additional","affiliation":[{"name":"Faculty of Management Dalhousie University  Halifax NS B3H 4R2 Canada"}],"role":[{"vocabulary":"crossref","role":"author"}]}],"member":"311","published-online":{"date-parts":[[2026,3,18]]},"reference":[{"key":"e_1_2_9_2_1","doi-asserted-by":"publisher","DOI":"10.1016\/j.geb.2005.03.004"},{"key":"e_1_2_9_3_1","unstructured":"Apple.com 2024.Apple unveils the new 13\u2010 and 15\u2010inch MacBook Air with the powerful M3 chip. 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