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Transport contract optimization under information asymmetry: an example

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Author Info

  • Xavier Brusset

    (IAG, Université Catholique de Louvain, Louvain la Neuve, Belgium)

  • Nico Temme

    (Centrum voor Wiskunde en Informatica, Amsterdam, Netherlands)

Abstract

The present paper shows why information asymmetry and bivariate stochastic demand and spot price induce different behaviours and economic inefficiency in a carrier – shipper relationship. An example is offered of a single period, single echelon, shipper-carrier transport model where demand addressed to the shipper and the spot transport price, two exogenous stochastic variables, follow a bivariate exponential probability distribution function. We evaluate the objective functions of the carrier and shipper over one period reiterated with a mix of long-term and short-term procurement strategies under five scenarios of information sharing. Some clues as to ways of solving for other types of bivariates are provided.

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Bibliographic Info

Paper provided by EconWPA in its series Econometrics with number 0512005.

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Length: 30 pages
Date of creation: 07 Dec 2005
Date of revision:
Handle: RePEc:wpa:wuwpem:0512005

Note: Type of Document - pdf; pages: 30. A discussion of game theoretic behaviour of a transport service provider and a shipper when demand and price of transport can vary dependently.
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Web page: http://128.118.178.162

Related research

Keywords: supply chain management; coordination; information sharing; decision anylisis; bivariate statistics;

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  1. Wu, D. J. & Kleindorfer, P. R. & Zhang, Jin E., 2002. "Optimal bidding and contracting strategies for capital-intensive goods," European Journal of Operational Research, Elsevier, vol. 137(3), pages 657-676, March.
  2. Grieger, Martin, 2003. "Electronic marketplaces: A literature review and a call for supply chain management research," European Journal of Operational Research, Elsevier, vol. 144(2), pages 280-294, January.
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