Advanced Search
MyIDEAS: Login to save this article or follow this journal

The Price of Anarchy in Supply Chains: Quantifying the Efficiency of Price-Only Contracts

Contents:

Author Info

  • Georgia Perakis

    ()
    (Sloan School of Management, Massachusetts Institute of Technology, Cambridge, Massachusetts 02139)

  • Guillaume Roels

    ()
    (Anderson School of Management, University of California, Los Angeles, California 90095)

Registered author(s):

    Abstract

    In this paper, we quantify the efficiency of decentralized supply chains that use price-only contracts. With a price-only contract, a buyer and a seller agree only on a constant transaction price, without specifying the amount that will be transferred. It is well known that these contracts do not provide incentives to the parties to coordinate their inventory/capacity decisions. We measure efficiency with the price of anarchy (PoA), defined as the largest ratio of profits between the integrated supply chain (that is, fully coordinated) and the decentralized supply chain. We characterize the efficiency of various supply chain configurations: push or pull inventory positioning, two or more stages, serial or assembly systems, single or multiple competing suppliers, and single or multiple competing retailers.

    Download Info

    If you experience problems downloading a file, check if you have the proper application to view it first. In case of further problems read the IDEAS help page. Note that these files are not on the IDEAS site. Please be patient as the files may be large.
    File URL: http://dx.doi.org/10.1287/mnsc.1060.0656
    Download Restriction: no

    Bibliographic Info

    Article provided by INFORMS in its journal Management Science.

    Volume (Year): 53 (2007)
    Issue (Month): 8 (August)
    Pages: 1249-1268

    as in new window
    Handle: RePEc:inm:ormnsc:v:53:y:2007:i:8:p:1249-1268

    Contact details of provider:
    Postal: 7240 Parkway Drive, Suite 300, Hanover, MD 21076 USA
    Phone: +1-443-757-3500
    Fax: 443-757-3515
    Email:
    Web page: http://www.informs.org/
    More information through EDIRC

    Related research

    Keywords: price of anarchy; supply contracts; price-only contracts; supply chain performance; supply chain design; games-group decisions; inventory production; policies; pricing;

    References

    No references listed on IDEAS
    You can help add them by filling out this form.

    Citations

    Citations are extracted by the CitEc Project, subscribe to its RSS feed for this item.
    as in new window

    Cited by:
    1. Kovács, András & Egri, Péter & Kis, Tamás & Váncza, József, 2013. "Inventory control in supply chains: Alternative approaches to a two-stage lot-sizing problem," International Journal of Production Economics, Elsevier, vol. 143(2), pages 385-394.
    2. Sun, Jiong & Debo, Laurens, 2014. "Sustaining long-term supply chain partnerships using price-only contracts," European Journal of Operational Research, Elsevier, vol. 233(3), pages 557-565.
    3. Marc Bollecker & Wilfrid Azan, 2008. "Les frontières de la recherche en contrôle de gestion : une analyse des cadres théoriques mobilisés," Post-Print halshs-00522395, HAL.
    4. Liu, Tian-Liang & Chen, Jian & Huang, Hai-Jun, 2011. "Existence and efficiency of oligopoly equilibrium under toll and capacity competition," Transportation Research Part E: Logistics and Transportation Review, Elsevier, vol. 47(6), pages 908-919.
    5. Martinez de Albeniz, Victor & Roels, Guillaume, 2007. "Competing for shelf space," IESE Research Papers D/717, IESE Business School.

    Lists

    This item is not listed on Wikipedia, on a reading list or among the top items on IDEAS.

    Statistics

    Access and download statistics

    Corrections

    When requesting a correction, please mention this item's handle: RePEc:inm:ormnsc:v:53:y:2007:i:8:p:1249-1268. See general information about how to correct material in RePEc.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: (Mirko Janc).

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If references are entirely missing, you can add them using this form.

    If the full references list an item that is present in RePEc, but the system did not link to it, you can help with this form.

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your profile, as there may be some citations waiting for confirmation.

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.