We develop a simple theoretical model of a long term buyer-supplier relationship with non-contractible buyer specific R&D investment, and derive predictions on the effects of trust and competition on suppliers’ investment and buyers’ procurement strategies. We address these issues empirically using unique survey data on individual buyer-supplier relationships in the German automotive industry. ...

We consider a mechanism design problem for energy procurement, when there is one buyer and one seller, and the buyer is the mechanism designer. The seller can generate energy from conventional (deterministic) and renewable (random) plants, and has multi-dimensional private information which determines her production cost. The objective is to maximize the buyer’s utility under the constraint tha...

We study a dynamic buyer-seller problem in which the good is information and there are no property rights. The potential buyer is reluctant to pay for information whose value to him is uncertain, but the seller cannot credibly convey its value to the buyer without disclosing the information itself. Information comes as divisible hard evidence. We show how and why the seller can appropriate a su...

Buyers always want to obtain goods at the lowest price. To do so, a buyer agent can have multiple concurrent negotiations with all the sellers. It is obvious that if the buyer obtains a good price from one of the sellers, the buyer should have more bargaining power in negotiating with other sellers. Then, other sellers should offer a lower price in order to make a deal. In this way, the concurr...

Increasingly, buyers are turning to the use of online, reverse auctions in their negotiation activities with suppliers. How does the use of these price competition mechanisms impact buyer-supplier relationships? We consider this question in the context of a quasi-experiment involving six reverse auctions conducted in the supply base of a major industrial buyer. The results indicate that online,...

This article studies design competition in government procurement by developing a model of two-dimensional auctions, wherejirms bid on both price and quality, and bids are evaluated by a scoring rule designed by a buyer. Three auction schemes-first score, second score, and second preferred offer-are introduced and related to actualpractices. If the buyer can commit to a scoring rule in his best...

The face of customer relationship management has shifted as business partners on both sides of the relationship deploy technology to better manage relationships, streamline business processes and achieve integration. The phenomenon of captive buyer and supplier relationships grounded in substantial unilateral monetary and organizational investments in achieving business objectives contrast with...

In this paper, an inventory model for two-stage supply chain is investigated. A supply chain with single vendor and single buyer is considered. We assume that shortage as a backorder is allowed for the buyer and the vendor makes the production set up every time the buyer places an order and supplies on a lot for lot basis. With these assumptions, the joint economic lot size model is introduced ...

This paper considers the e¤ect of linkage between bargains that a single buyer has with two suppliers of di¤erent items. The buyer’s valuation is private information but it is commonly known that one of the items is worth twice as much to the buyer as the other. Each bargain uses the extensive form of Section 5 of Fudenberg and Tirole (1983). We …nd that it is optimal for the buyer either to ba...

Consider a bilateral trading market where there is one potential buyer and one potential seller of an object. The value that the buyer and seller place on the object depends on the product’s quality, . In particular, assume the value to the buyer is vB and the value to the seller is vS : Assume that the quality of the good is uniformly distributed between 0 and 1, U [0; 1]: Tomake the problem i...