Abstract: By introducing fairness preference into a capital constrained two echelon supply chain mode, this paper studies the effect of the retailers′ fairness preference on supply chain financing decision and its overall coordination. The study finds that when the market demand and unit production cost meet certain conditions, there is a threshold and when the degree of the retailer′s fairness preference is higher than the threshold, the manufacturer will refuse to provide trade credit and set the highest wholesale price, leading to a double marginalization; otherwise the manufacturer will offer trade credit and the double marginalization will be eliminated; the retailer′s bargaining power is enhanced as the degree of the retailer′s fairness preference increases below the threshold, and fairness preference has become a means for retailers to obtain overall profit distribution in the supply chain; fairness preference makes acceptable wholesale price for the retailer be positively related to the unit cost of production, and this relationship is enhanced with the increase of the degree of the retailer′s fairness preference. In conclusion, this paper proves that the retailer′s fairness preference will affect financing decisions, and financing decisions will affect the coordination of the whole supply chain, which can provide more practical decision-making guidance for manufacturers.

Key words: fairness preference, trade credit, bank financing, supply chain financing