This paper analyzes the effect of landowner risk preferences and land quality on the optimal mix of vertically integrated production and contracted production of an energy crop in a region characterized by heterogeneity in landowners’ risk preferences and land quality and with riskiness of returns from both energy crop and conventional crop production. We examine the determinants of the decisio...

We describe research on a supply chain contracting problem that was sponsored by a major semi-conductor manufacturer. The manufacturer sells products (semiconductor parts) with varying quality levels through a network of distributors to end consumers (independent computer shops, system configurators, hobbyists, etc.) who have heterogeneous valuations for quality. Since production costs for semi...

M emerging technologies exhibit path-dependent demands driven by positive network feedback. Such network effects profoundly impact marketing strategists’ thinking in today’s network economy. However, the significant network externalities expected by many people often fail to materialize in the emerging technology market. We analyze this phenomenon in the context of a technology distribution cha...

This paper looks at the outsourcing of research and development (R&D) activities. We consider cost reducing R&D and allow manufacturing firms to decide whether to outsource the project to research subcontractors or carry out the research in-house. We use a principal-agent framework and consider fixed and revenue-sharing contracts. We solve for the optimal contract under these constraints. We fi...

Using data on mobile phone handset sales from a single retail store, we examine the impact of different retail responsibility designations and vertical contracts on seller service provision, firm profitability, and social welfare. During our sample, this store switched from retailer-managed retailing with linear pricing contracts to manufacturermanaged retailing with revenue sharing. We estimat...

A large body of theoretical work has explored the channels through which vertical contracts can induce efficiency improvements. However, it is also important to study vertical contracts empirically in order to gain insight into the relative size of different types of efficiency gains. In this paper, I empirically analyse a contractual innovation in the vertically separated video rental industry...

A revenue sharing contract is one of the mechanisms that coordinate decision makers in a decentralized supply chain toward the consensual goal. The transfer prices between different echelons in the supply chain influence the total supply chain profits. The study aims to explore various transfer pricing heuristics on the supply chain coordination in terms of the supply chain profits and their in...

We analyze a firm designing and selling a seasonal product with demand uncertainty and a single ordering opportunity. Prior to the start of the selling season, product quality and inventory must be jointly determined; a higher quality product results in a greater selling price but also greater marginal production cost. We consider both a centralized supply chain, in which a single firm determin...

We consider a decentralized two-period supply chain in which a manufacturer produces a product and sells it through a retailer facing a price-dependent demand. We assume that the secondperiod production cost declines linearly in the first-period production, but with a random learning rate. As the mean and/or the standard deviation of the learning rate increase, the traditional double marginaliz...

We investigate how a supply chain, formed by a risk-neutral supplier and a riskaverse retailer, can be coordinated with a supply contract. We demonstrate that the standard wholesale, buy-back or revenue-sharing contracts do not coordinate such a channel. We propose a definition of coordination of the supply chain, and design an easy-to-implement risk-sharing contract that offers the desired dow...