Who Should Take Over Operations in a Supply Chain? The Effect of Retailer, Manufacturer Efforts, and Specificity.

36 Pages Posted: 20 Sep 2007

See all articles by Santiago Kraiselburd

Santiago Kraiselburd

MIT Zaragoza International Logistics Program; INCAE Business School

Date Written: March 20, 2006

Abstract

When is having no previous contract better than having one, if ever? When should a manufacturer/retailer take over part (or all) of the other party's operation, instead of considering just a contract? How about the opposite situation? This paper responds these questions in the context of a Supply Chain under a single period scenario where both the manufacturer and the retailer can exert uncontractible effort that may or may not be specific to the relationship. We thus contribute to the Supply Chain Literature with a new application of the economics' incomplete contract approach to vertical integration.

Keywords: Newsvendor, contracts, incentives, Vendor Managed Inventory, retailer effort, manufacturer effort, vertical integration.

Suggested Citation

Kraiselburd, Santiago, Who Should Take Over Operations in a Supply Chain? The Effect of Retailer, Manufacturer Efforts, and Specificity. (March 20, 2006). Instituto de Empresa Business School, Forthcoming, Available at SSRN: https://ssrn.com/abstract=1015578 or http://dx.doi.org/10.2139/ssrn.1015578

Santiago Kraiselburd (Contact Author)

MIT Zaragoza International Logistics Program ( email )

Avenida Gomez Laguna 25
Zaragoza, 50009
Spain

INCAE Business School

Alajuela
Costa Rica

HOME PAGE: http://www.incae.edu

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