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Decentralization Policies for Supply Chain Investments Under Asymmetric Information

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Agrell, Per Joakim [UCL] Bogetoft, Peter [Copenhagen Business School]

Supply chains need specific investments for improved performance in terms of lead-time, cost, and quality. We study the contractual choice of a coordinator to either centralize or delegate the investment decision in a three-stage chain. The analysis derives closed-form results for the economic performance of three decentralized contracting schemes under asymmetric information on investment cost, as well as the optimal full revelation results. The results show that the observed practice of tier-1 delegated investments leads to relatively poor performance because of underinvestment. We illustrate the findings with the Boeing 787 debacle. Copyright © 2016 John Wiley & Sons, Ltd.

Document type Article de périodique (Journal article)
Access type Accès interdit
Publication date 2017
Language Anglais
Journal information "Managerial and Decision Economics : the international journal of research and progress in management economics" - Vol. 38, p. 394-408 (2017)
Peer reviewed yes
Publisher JohnWiley & Sons Ltd. (Chichester)
issn 0143-6570
e-issn 1099-1468
Publication status Publié
Affiliations UCL - SSH/LouRIM - Louvain Research Institute in Management and Organizations
UCL - SSH/LIDAM/CORE - Center for operations research and econometrics
Links
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Bibliographic reference Agrell, Per Joakim ; Bogetoft, Peter. Decentralization Policies for Supply Chain Investments Under Asymmetric Information. In: Managerial and Decision Economics : the international journal of research and progress in management economics, Vol. 38, p. 394-408 (2017)
Permanent URL http://hdl.handle.net/2078.1/172531