Pricing in Business-to-Business Contracts: Sharing Risk, Profit and Information

The Oxford Handbook of Pricing Management, O. Ozer, R. Phillips, eds., Oxford University Press, 2012

51 Pages Posted: 23 Nov 2011 Last revised: 14 Oct 2017

See all articles by Murat Kaya

Murat Kaya

Sabanci University

Özalp Özer

Jindal School of Management - The University of Texas at Dallas

Date Written: November 23, 2011

Abstract

In this chapter, we illustrate how pricing terms in business-to-business (B2B) contracts can be used to align incentives, and to share risks, profits and information in supply chains that face uncertain demand. In the context of inventory risk, we discuss how a manufacturer can influence its retailer’s product availability and pricing decisions through B2B contracts. In the context of capacity risk, we illustrate how contracts enable a manufacturer to influence a supplier’s component capacity choice and to elicit strategic information from the supplier. In addition to developing relevant mathematical models, we also discuss contract implementation issues and managerial implications.

Keywords: B2B contracting, pricing contracts, supply chain management, inventory risk, capacity risk, coordination, news vendor model

Suggested Citation

Kaya, Murat and Özer, Özalp, Pricing in Business-to-Business Contracts: Sharing Risk, Profit and Information (November 23, 2011). The Oxford Handbook of Pricing Management, O. Ozer, R. Phillips, eds., Oxford University Press, 2012. Available at SSRN: https://ssrn.com/abstract=1963666

Murat Kaya

Sabanci University ( email )

Sabanci Universitesi MDB Fakultesi
Orhanli Tuzla
Istanbul, 34956
Turkey
90-216-483 9622 (Phone)
90-216-483 9550 (Fax)

HOME PAGE: http://myweb.sabanciuniv.edu/mkaya/

Özalp Özer (Contact Author)

Jindal School of Management - The University of Texas at Dallas ( email )

Jindal School of Management
800 W. Campbell Road
Richardson, TX 75080
United States

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