Simple Contracts to Assure Supply Under Noncontractible Capacity and Asymmetric Cost Information

2018 ◽  
Vol 20 (2) ◽  
pp. 217-231 ◽  
Author(s):  
Ehsan Bolandifar ◽  
Tianjun Feng ◽  
Fuqiang Zhang
Keyword(s):  
Cost Information ◽  
Asymmetric Cost ◽  
Simple Contracts ◽  
Asymmetric Cost Information

Option contract design for supply chains under asymmetric cost information

Kybernetes ◽  
2019 ◽  
Vol 48 (5) ◽  
pp. 835-860 ◽  
Author(s):  
Xue Chen ◽  
Bo Li ◽  
Simin An
Keyword(s):  
Supply Chain ◽  
Production Cost ◽  
Production Costs ◽  
Cost Information ◽  
Content Type ◽  
Option Contracts ◽  
Option Contract ◽  
Information Rent ◽  
Asymmetric Cost ◽  
Asymmetric Cost Information

Purpose A lack of visibility into the manufacturer’s production cost information impedes a retailer’s ability to maximize her own profits, especially when market demand is uncertain. The purpose of this paper is to investigate the use of an option contract within a one-period two-echelon supply chain in the presence of asymmetric cost information. Design/methodology/approach Based on the principal-agent model, the retailer, acting as a Stackelberg leader, offers a menu of option contracts to mitigate the risk of uncertain demand and reveal asymmetric production cost information. The optimal contract in asymmetric and symmetric information scenarios is derived. Finally, the impact of production costs on the optimal contracts and the actors’ profits is explored by numerical experiments. Findings By comparing the optimal equilibrium solutions in two scenarios, the authors show that asymmetric cost information has a large impact on the optimal option contract and profits. In addition, information rent is affected by the type differential. The results prove that the level of information asymmetry plays a vital role in option contracts and profits. Originality/value Different from the existing literature on private demand information, this paper considers a supply chain with asymmetric cost information in the context of option contracts. Interestingly, not only the production cost but also the probability of a low production cost can affect the option strike price. In addition, from the perspective of the manufacturer, a high cost does not always bring a high information rent. These findings can provide some guidance to decision-makers.

scholarly journals Mix Stickiness Under Asymmetric Cost Information

2019 ◽  
Vol 65 (6) ◽  
pp. 2787-2812 ◽  
Author(s):  
Rick Antle ◽  
Peter Bogetoft
Keyword(s):  
Cost Information ◽  
Asymmetric Cost ◽  
Asymmetric Cost Information

scholarly journals Newsvendor competition under asymmetric cost information

2018 ◽  
Vol 271 (2) ◽  
pp. 561-576 ◽  
Author(s):  
Kemal Güler ◽  
Evren Körpeoğlu ◽  
Alper Şen
Keyword(s):  
Cost Information ◽  
Asymmetric Cost ◽  
Asymmetric Cost Information
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