Inventory in Vertical Relationships with Private Information and Interdependent Values
AbstractWe study the use of inventory when a distributor is better informed about demand than a manufacturer. We find that when distributor and manufacturer values are interdependent it is optimal to endow the distributor with some inventory before it obtains its private information. We characterize the final allocation of the good and show that the distributor may have too few (many) units relative to the efficient allocation when demand is high (low).
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Bibliographic InfoPaper provided by Duke University, Department of Economics in its series Working Papers with number 10-35.
Date of creation: 2010
Date of revision:
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Postal: Department of Economics Duke University 213 Social Sciences Building Box 90097 Durham, NC 27708-0097
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Web page: http://econ.duke.edu/
Other versions of this item:
- James Anton & Gary Biglaiser & Tracy Lewis, 2011. "Inventory in vertical relationships with private information and interdependent values," International Journal of Economic Theory, The International Society for Economic Theory, vol. 7(1), pages 51-63, 03.
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