Please use this identifier to cite or link to this item: https://scholarbank.nus.edu.sg/handle/10635/44932
DC FieldValue
dc.titleProducer-supplier contracts with incomplete information
dc.contributor.authorLim, W.S.
dc.date.accessioned2013-10-10T04:38:01Z
dc.date.available2013-10-10T04:38:01Z
dc.date.issued2001
dc.identifier.citationLim, W.S. (2001). Producer-supplier contracts with incomplete information. Management Science 47 (5) : 709-715. ScholarBank@NUS Repository.
dc.identifier.issn00251909
dc.identifier.urihttp://scholarbank.nus.edu.sg/handle/10635/44932
dc.description.abstractThis paper investigates the contract design problem of a producer when he purchases parts from a supplier, and there is incomplete information regarding the quality of the parts. This is the first game-theoretic model of quality control that captures this informational asymmetry. We focus on two compensation schemes embedded in the contract, namely, price rebate (when inspection is done upon receipt of the parts) and warranty. We show that when a full-price rebate is not possible and the producer and the supplier have to share the damage costs, an optimal contract is such that the supplier compensates the producer by the same amount, regardless of his quality type. However, a supplier with low quality is more likely to be offered a contract with an inspection scheme, while a supplier with high quality is constrained with a warranty scheme. We also show that when the producer need not share the cost in exactly one of the compensation schemes, he may still offer the other compensation scheme to a supplier type depending on the relative costs involved, the maximum compensation cost acceptable by all supplier types, and his ex ante beliefs about the quality level of the supplier.
dc.sourceScopus
dc.subjectContract Design
dc.subjectGame Theory
dc.subjectIncomplete Information
dc.subjectQuality Control
dc.typeArticle
dc.contributor.departmentDECISION SCIENCES
dc.description.sourcetitleManagement Science
dc.description.volume47
dc.description.issue5
dc.description.page709-715
dc.description.codenMSCIA
dc.identifier.isiutNOT_IN_WOS
Appears in Collections:Staff Publications

Show simple item record
Files in This Item:
There are no files associated with this item.

Google ScholarTM

Check


Items in DSpace are protected by copyright, with all rights reserved, unless otherwise indicated.