This paper investigates the impact of price competition and scale diseconomies on the choice of vertical control
structure under the chain-to-chain model, and addresses the evolution process and the equilirum of the vertical structure from
the aspect of manufacturer’s performance and supply chain’s performance. The centralized control structure is a dominant
equilibrium for the supply chain and the manufacturer when the price competition is relatively weak, and the threshold
intensity of price competition is influenced by the scale diseconomies. The decentralized control structure is a dominant
equilibrium when the price competition is fiercest from the attitude of the supply chain’s performance.