Optimal Contract Orders and Relationship-Specific Investments in Vertical Organizations

Autor:	Sarah Parlane, Ying-Yi Tsai
Rok vydání:	2013
Předmět:	Moral Hazard Vertical Organization Supply Base Management Contract Order Size Relationship-specific Investment Strategic Outsourcing ComputerApplications_COMPUTERSINOTHERSYSTEMS
Popis:	This paper characterizes the optimal contracts issued to suppliers when delivery is subject to disruptions and when they can invest to reduce such a risk. When investment is contractible dual sourcing is generally optimal because it reduces the risk of disruption. The manufacturer (buyer) either issues symmetric contracts or selects one supplier as a major provider who invests while the buffer supplier does not. An increased reliance on single sourcing or on a major supplier is optimal under moral hazard. Indeed, we show that order consolidation increases the manufacturer’s profits because it serves as an incentive device in inducing investment.
Databáze:	OpenAIRE
Externí odkaz:	https://explore.openaire.eu/search/publication?articleId=od_______645::6a79591b86cbdaf5fd8a1435a352f2d1 http://hdl.handle.net/10197/4811 Zobrazit plný text záznamu