Dynamic supply chain coordination games with repeated bargaining

Brusset, Xavier [UCL] Agrell, Per Joakim [UCL]

Coordination in a supply chains may require investment in relationship-specific assets (RSA) including information systems and human resources from all or a subset of the partners. These investments are typically partially non-verifiable, possibly based on internal resources or opportunity costs. A supplier offers a single-price single-period contract to a downstream manufacturer who accepts or turns to a non-strategic outside option. Both parties invest in relationship-specific assets (RSA) accordingly. Using a game theoretic framework of repeated single-period bargaining under asymmetric information and outside options, we show how a supplier may behave opportunistically. We show how this rent extraction threat is mitigated when the manufacturer mis-informs the supplier or hides information from her. As a result of both behaviors, our model explains how supply chain coordination and efficiency are impaired. On a normative basis, we provide the manufacturer with new justifications for both dual sourcing and distorting information. Numerical examples illustrate the results.

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Document type	Article de périodique (Journal article) – Article de recherche
Access type	Accès interdit
Publication date	2014
Language	Anglais
Journal information	"Computers & Industrial Engineering" - Vol. 80, p. 12-22 (2014)
Peer reviewed	yes
Publisher	Pergamon ((United Kingdom) Kidlington)
issn	0360-8352
e-issn	1879-0550
Publication status	Publié
Affiliations	UCL - SSH/LouRIM - Louvain Research Institute in Management and Organizations UCL - SSH/LIDAM/CORE - Center for operations research and econometrics
Keywords	Relationship-specific assets ; Contract design ; Asymmetric information ; Rent capture ; Bayesian belief
Links	http://hdl.handle.net/2078.1/153248[Handle] https://doi.org/10.1016/j.cie.2014.11.011[DOI]

See also
	[boreal:70461]	Dynamic supply chain coordination games with repeated bargaining