Incentives for Quality Through Endogenous Routing
Manufacturing & Service Operations Management
Contracting for Collaborative Services
Management Science
Asymmetric Information and Economies of Scale in Service Contracting
Manufacturing & Service Operations Management
Manufacturing & Service Operations Management
The Strategic Perils of Low Cost Outsourcing
Management Science
Outsourcing a Two-Level Service Process
Management Science
Performance-Based Contracts for Outpatient Medical Services
Manufacturing & Service Operations Management
Capacity planning and performance contracting for service facilities
Decision Support Systems
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In this paper, we examine contracts to coordinate the capacity decision of a vendor who has been hired by a client to provide call center support. We consider a variety of contracts, all based on our observations of contracts used by one large vendor. We examine the role of different contract features such as pay-per-time, pay-per-call, service-level agreements, and constraints on service rates and abandonment. We show how different combinations of these contract features enable client firms to better manage vendors when there is information asymmetry about worker productivity. In particular, we focus on how different contracts can coordinate by yielding the system-optimal capacity decision by the vendor and consider how profits are allocated between the client and the vendor.