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First-Time Interaction Under Revenue-Sharing Contract and Asymmetric Beliefs of Supply-Chain Members

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New Trends in Emerging Complex Real Life Problems

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Abstract

The paper provides a thorough investigation of a first-time interaction between a retailer and a manufacturer who are unreliable in a cost function of the manufacturer. We consider a two-echelon supply chain of a single customized product, where parties interact via a revenue-sharing contract. The general model is formulated as a Retailer-Stackelberg game with two-sided information asymmetry. We derive the equilibrium strategy and parties’ profits when: (i) information is complete, (ii) hidden information asymmetry is present, and (iii) known information asymmetry is present. For a third scenario, we propose two different contracts to induce a Pareto-optimal information-sharing equilibrium.

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Notes

  1. 1.

    \( s \to \infty \) means that at least one component of S tends to infinity.

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Author information

Authors and Affiliations

  1. Department of Management, Bar-Ilan University, 5290002, Ramat-Gan, Israel

    Tatyana Chernonog

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  1. Tatyana Chernonog
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Correspondence to Tatyana Chernonog .

Editor information

Editors and Affiliations

  1. Department of Mathematics and Computer Science, University of Catania, Catania, Italy

    Patrizia Daniele

  2. Department of Mathematics and Computer Science, University of Catania, Catania, Italy

    Laura Scrimali

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Chernonog, T. (2018). First-Time Interaction Under Revenue-Sharing Contract and Asymmetric Beliefs of Supply-Chain Members. In: Daniele, P., Scrimali, L. (eds) New Trends in Emerging Complex Real Life Problems. AIRO Springer Series, vol 1. Springer, Cham. https://doi.org/10.1007/978-3-030-00473-6_18

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