  We interpret multi-product supply chains (SCs) as coordinated markets; under
this interpretation, a SC optimization problem is a market clearing problem
that allocates resources and associated economic values (prices) to different
stakeholders that bid into the market (suppliers, consumers, transportation,
and processing technologies). The market interpretation allows us to establish
fundamental properties that explain how physical resources (primal variables)
and associated economic values (dual variables) flow in the SC. We use duality
theory to explain why incentivizing markets by forcing stakeholder
participation (e.g., by imposing demand satisfaction or service provision
constraints) yields artificial price behavior, inefficient allocations, and
economic losses. To overcome these issues, we explore market incentive
mechanisms that use bids; here, we introduce the concept of a stakeholder graph
(a product-based representation of a supply chain) and show that this
representation allows us to naturally determine minimum bids that activate the
market. These results provide guidelines to design SC formulations that
properly remunerate stakeholders and to design policy that foster market
transactions. The results are illustrated using an urban waste management
problem for a city of 100,000 residents.
