Estimating the supply chain efficiency loss when the seller has to estimate the buyer’s willingness to pay

Xavier Brusset

RAIRO - Operations Research - Recherche Opérationnelle (2014)

  • Volume: 48, Issue: 4, page 477-496
  • ISSN: 0399-0559

Abstract

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We study the pricing problem between two firms when the manufacturer’s willingness to pay (wtp) for the supplier’s good is not known by the latter. We demonstrate that it is in the interest of the manufacturer to hide this information from the supplier. The precision of the information available to the supplier modifies the rent distribution. The risk of opportunistic behaviour entails a loss of efficiency in the supply chain. The model is extended to the case of a supplier submitting offers to several manufacturers. Some managerial insight through a numerical illustration is provided.

How to cite

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Brusset, Xavier. "Estimating the supply chain efficiency loss when the seller has to estimate the buyer’s willingness to pay." RAIRO - Operations Research - Recherche Opérationnelle 48.4 (2014): 477-496. <http://eudml.org/doc/275035>.

@article{Brusset2014,
abstract = {We study the pricing problem between two firms when the manufacturer’s willingness to pay (wtp) for the supplier’s good is not known by the latter. We demonstrate that it is in the interest of the manufacturer to hide this information from the supplier. The precision of the information available to the supplier modifies the rent distribution. The risk of opportunistic behaviour entails a loss of efficiency in the supply chain. The model is extended to the case of a supplier submitting offers to several manufacturers. Some managerial insight through a numerical illustration is provided.},
author = {Brusset, Xavier},
journal = {RAIRO - Operations Research - Recherche Opérationnelle},
keywords = {supply chain management; information asymmetry; bayesian belief; mechanism design; log-concave distributions; Bayesian belief},
language = {eng},
number = {4},
pages = {477-496},
publisher = {EDP-Sciences},
title = {Estimating the supply chain efficiency loss when the seller has to estimate the buyer’s willingness to pay},
url = {http://eudml.org/doc/275035},
volume = {48},
year = {2014},
}

TY - JOUR
AU - Brusset, Xavier
TI - Estimating the supply chain efficiency loss when the seller has to estimate the buyer’s willingness to pay
JO - RAIRO - Operations Research - Recherche Opérationnelle
PY - 2014
PB - EDP-Sciences
VL - 48
IS - 4
SP - 477
EP - 496
AB - We study the pricing problem between two firms when the manufacturer’s willingness to pay (wtp) for the supplier’s good is not known by the latter. We demonstrate that it is in the interest of the manufacturer to hide this information from the supplier. The precision of the information available to the supplier modifies the rent distribution. The risk of opportunistic behaviour entails a loss of efficiency in the supply chain. The model is extended to the case of a supplier submitting offers to several manufacturers. Some managerial insight through a numerical illustration is provided.
LA - eng
KW - supply chain management; information asymmetry; bayesian belief; mechanism design; log-concave distributions; Bayesian belief
UR - http://eudml.org/doc/275035
ER -

References

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