Asymmetric Buyer-Seller Relationships and Real Switching Options
نویسنده
چکیده
Industrial buyer-seller relationships are frequently characterized by the fact that the seller and/or the buyer have to dedicate specific up-front investments to the relationship. Marketing research analyzes these relationships on the basis of Transaction Cost Economics (TCE). TCE highlights the risk of hold-up which arises after specific investments are dedicated. However, exogenous uncertainties are largely neglected in TCE. Therefore, the aim of this paper is to analyze the effects of both hold-up and exogenous uncertainty on the value of customers in buyer-seller relationships. From the perspective of a supplier, the value of her customers is modeled by a dynamic programming approach. It is shown how different contracting scenarios affect hold-up and the value of an option to switch customers. A numerical analysis illustrates the analytical findings. JEL classification: L14, D23, O33
منابع مشابه
Equilibrium Partner Switching in a Bargaining Model with Asymmetric Information
We study a model in which the seller of an indivisible object faces two potential buyers and makes an offer to either of them in each period. We find that the seller’s ability to extract surplus from them depends crucially on the value of the cost of switching from one buyer to the next. If the seller is pessimistic about the buyers’ valuations and there is a switching cost, however small, then...
متن کاملData envelopment analysis for imprecise data in Buyer-Seller Relationship
In the environment of business‐to‐business e‐commerce, Buyers and sellers in mature industrial markets can turn single transactions into long-term beneficial relationships by a deeper understanding of the complex connection between the two and buyers and sellers are uncertain about their roles. A “must-do” for the sellers, in particular, is to understand patterns of investment and reward,...
متن کاملCoordinating a Seller-Buyer Supply Chain with a Proper Allocation of Chain’s Surplus Profit Using a General Side-Payment Contract
In this paper, seller-buyer supply chain coordination with general side-payment contracts is introduced to gain the maximum possible chain profit. In our model, the logistics costs for both buyer and seller are considered and the final demand is also supposed to be a decreasing function of the retail price. Since parties aim to maximize their individual profits, the contractual parameters are s...
متن کاملDeterminants of dependence in dyadic buyer-supplier relationships
It is generally agreed that ‘power’ and ‘dependence’ are important concepts for the understanding of buyer-seller relationships. However, little research has been carried out aimed at identifying determinants of dependence in dyadic buyer-supplier relationships. In this study we have addressed this gap, combining an extensive literature study with an empirical study (expert interviews). The stu...
متن کاملStrategic Real Options∗
I introduce a strategic seller to a standard model of real options. A privately informed seller, such as a startup, tries to court a forward-looking buyer, such as a venture capitalist. The buyer learns gradually about the seller’s quality, high or low, through exogenous news and can “adopt” the seller at any time. The seller pays a flow cost but can exit or privately upgrade its quality at any...
متن کامل