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Article: How a retailer should manipulate a dominant manufacturer's perception of market and cost parameters

TitleHow a retailer should manipulate a dominant manufacturer's perception of market and cost parameters
Authors
KeywordsFailure of channel coordination
Information asymmetry
Information distortion
Supply chain contracts
Issue Date2008
PublisherElsevier BV. The Journal's web site is located at http://www.elsevier.com/locate/ijpe
Citation
International Journal Of Production Economics, 2008, v. 116 n. 1, p. 43-60 How to Cite?
AbstractA manufacturer supplies a retailer who has private superior knowledge about three system parameters; namely, market size, market sensitivity, and her retail-processing cost. For each parameter, the manufacturer's imperfect knowledge is characterized by a subjective distribution. Should the retailer help to improve the manufacturer's imperfect knowledge when the manufacturer is designing his supply contract? Can the manufacturer induce the retailer to share her superior knowledge by informing the retailer that he will be using sophisticated channel-coordinating contract formats? It is likely that one would surmise from the literature that the answer to both questions is "yes." However, this paper shows that very often the correct answer is "no." Specifically, for each of the three system parameters, we show that the retailer is: (i) always motivated to mislead the manufacturer to have a biased mean value for his subjective distribution; and (ii) motivated, over a wide range of likely conditions, to increase the variance of the manufacturer's subjective distribution. Moreover, the manufacturer cannot narrow this range of confusion-encouraging conditions by using a more sophisticated contract among the current known formats (including a "menu of contracts"). Our results highlight the need to develop arrangements that can actually motivate a dominated retailer to share knowledge honestly. © 2008 Elsevier B.V. All rights reserved.
Persistent Identifierhttp://hdl.handle.net/10722/60187
ISSN
2015 Impact Factor: 2.782
2015 SCImago Journal Rankings: 2.749
ISI Accession Number ID
References

 

DC FieldValueLanguage
dc.contributor.authorWang, JCen_HK
dc.contributor.authorLau, HSen_HK
dc.contributor.authorLau, AHLen_HK
dc.date.accessioned2010-05-31T04:05:32Z-
dc.date.available2010-05-31T04:05:32Z-
dc.date.issued2008en_HK
dc.identifier.citationInternational Journal Of Production Economics, 2008, v. 116 n. 1, p. 43-60en_HK
dc.identifier.issn0925-5273en_HK
dc.identifier.urihttp://hdl.handle.net/10722/60187-
dc.description.abstractA manufacturer supplies a retailer who has private superior knowledge about three system parameters; namely, market size, market sensitivity, and her retail-processing cost. For each parameter, the manufacturer's imperfect knowledge is characterized by a subjective distribution. Should the retailer help to improve the manufacturer's imperfect knowledge when the manufacturer is designing his supply contract? Can the manufacturer induce the retailer to share her superior knowledge by informing the retailer that he will be using sophisticated channel-coordinating contract formats? It is likely that one would surmise from the literature that the answer to both questions is "yes." However, this paper shows that very often the correct answer is "no." Specifically, for each of the three system parameters, we show that the retailer is: (i) always motivated to mislead the manufacturer to have a biased mean value for his subjective distribution; and (ii) motivated, over a wide range of likely conditions, to increase the variance of the manufacturer's subjective distribution. Moreover, the manufacturer cannot narrow this range of confusion-encouraging conditions by using a more sophisticated contract among the current known formats (including a "menu of contracts"). Our results highlight the need to develop arrangements that can actually motivate a dominated retailer to share knowledge honestly. © 2008 Elsevier B.V. All rights reserved.en_HK
dc.languageengen_HK
dc.publisherElsevier BV. The Journal's web site is located at http://www.elsevier.com/locate/ijpeen_HK
dc.relation.ispartofInternational Journal of Production Economicsen_HK
dc.subjectFailure of channel coordinationen_HK
dc.subjectInformation asymmetryen_HK
dc.subjectInformation distortionen_HK
dc.subjectSupply chain contractsen_HK
dc.titleHow a retailer should manipulate a dominant manufacturer's perception of market and cost parametersen_HK
dc.typeArticleen_HK
dc.identifier.openurlhttp://library.hku.hk:4550/resserv?sid=HKU:IR&issn=0925-5273&volume=116&issue=1&spage=43&epage=60&date=2008&atitle=How+a+retailer+should+manipulate+a+dominant+manufacturer%27s+perception+of+market+and+cost+parameters-
dc.identifier.emailWang, JC: wangjc@business.hku.hken_HK
dc.identifier.emailLau, AHL: ahlau@business.hku.hken_HK
dc.identifier.authorityWang, JC=rp01107en_HK
dc.identifier.authorityLau, AHL=rp01072en_HK
dc.description.naturelink_to_subscribed_fulltext-
dc.identifier.doi10.1016/j.ijpe.2008.06.007en_HK
dc.identifier.scopuseid_2-s2.0-53549112152en_HK
dc.identifier.hkuros166503en_HK
dc.relation.referenceshttp://www.scopus.com/mlt/select.url?eid=2-s2.0-53549112152&selection=ref&src=s&origin=recordpageen_HK
dc.identifier.volume116en_HK
dc.identifier.issue1en_HK
dc.identifier.spage43en_HK
dc.identifier.epage60en_HK
dc.identifier.isiWOS:000261007900004-
dc.publisher.placeNetherlandsen_HK
dc.identifier.scopusauthoridWang, JC=15838282400en_HK
dc.identifier.scopusauthoridLau, HS=7201497264en_HK
dc.identifier.scopusauthoridLau, AHL=7202626080en_HK

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