Abstract: In this paper,a model is proposed to study a system,which consists of one client enterprise and two competing third party logistics service providers(TPLSPs).Meanwhile, the effort level of two TPLSPs affect the stochastic demand simultaneously. Using the game theory, the optimal decisions are given, the dynamic relations are studied among the optimal effort level of two TPLSPs and their share of market, service price and unit cost, in the two cases of centralized decision-making and decentralized decision-making. In order to coordinate the model, a combined contract is introduced in which the client enterprise should share its revenue with both TPLSPs, and need to take part of the effort cost of both TPLSPs, discuss the conditions of the contract could coordinate the system. It can be found that heavier share of market, more easily the TPLSP accept a contrace with a lower share of enterprise's revenue. Results prove that competition of TPLSPs can not only improve both TPLSPs's effort level, but also promote the enterprise's optimal order quantity.

Key words: logistics contract, game theory, effort, share of market.