Note: The Newsvendor Model with Endogenous Demand
Management Science
A General Equilibrium Model for Industries with Price and Service Competition
Operations Research
Agency Costs in a Supply Chain with Demand Uncertainty and Price Competition
Management Science
Coordination Mechanisms for Supply Chains Under Price and Service Competition
Manufacturing & Service Operations Management
A note on demand functions with uncertainty
Operations Research Letters
On the role of revenue-sharing contracts in supply chains
Operations Research Letters
Execution Risk in High-Frequency Arbitrage
Management Science
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This paper extends the theory of supply chain incentive contracts from the static newsvendor framework of the existing literature to the simplest dynamic setting. A manufacturer distributes a product through retailers who compete on both price and fill rates. We show that inventory durability is the key factor in determining the underlying nature of incentive distortions and their contractual resolutions. When the product is highly perishable, retailers are biased toward excessive price competition and inadequate inventories. Vertical price floors or inventory buybacks (subsidies for unsold inventory) can coordinate incentives in both pricing and inventory decisions. When the product is less perishable, the distortion is reversed and vertical price ceilings or inventory penalties can coordinate incentives.