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Experimental Investigation of Supplier-Retailer Contracts: The Wholesale Price Contract

Author

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  • Claudia Keser
  • Giuseppe A. Paleologo

Abstract

We examine decision making in a simple supplier-retailer wholesale price contract in the experimental economics laboratory. We observe wholesale prices and order quantities below the game-theoretical predictions. The supply chain's efficiency is as predicted but profits are more equitably allocated. Cette étude en économie expérimentale examine les contrats de prix en gros négociés entre un détaillant et un vendeur. Nous observons que les prix et les quantités négociés sont en dessous des prévisions tirées du modèle retenue en théorie des jeux. Les résultats expérimentaux indiquent que l'efficacité de la chaîne d'approvisionnement est inférieur à 100 % tel que prédit par le modèle. Par ailleurs, les profits sont alloués de façon plus équitable que l'allocation prédite par le modèle.

Suggested Citation

  • Claudia Keser & Giuseppe A. Paleologo, 2004. "Experimental Investigation of Supplier-Retailer Contracts: The Wholesale Price Contract," CIRANO Working Papers 2004s-57, CIRANO.
  • Handle: RePEc:cir:cirwor:2004s-57
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    File URL: http://www.cirano.qc.ca/files/publications/2004s-57.pdf
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    References listed on IDEAS

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    Cited by:

    1. repec:pal:jorsoc:v:61:y:2010:i:6:d:10.1057_jors.2009.56 is not listed on IDEAS
    2. Christoph H. Loch & Yaozhong Wu, 2008. "Social Preferences and Supply Chain Performance: An Experimental Study," Management Science, INFORMS, vol. 54(11), pages 1835-1849, November.
    3. Abdolkarim Sadrieh & Guido Voigt, 2017. "Strategic risk in supply chain contract design," Journal of Business Economics, Springer, vol. 87(1), pages 125-153, January.
    4. Elahi, Ehsan & Lamba, Narasimha & Ramaswamy, Chinthana, 2013. "How can we improve the performance of supply chain contracts? An experimental study," International Journal of Production Economics, Elsevier, vol. 142(1), pages 146-157.
    5. Wu, Diana Yan, 2013. "The impact of repeated interactions on supply chain contracts: A laboratory study," International Journal of Production Economics, Elsevier, vol. 142(1), pages 3-15.
    6. Elena Katok & Diana Yan Wu, 2009. "Contracting in Supply Chains: A Laboratory Investigation," Management Science, INFORMS, vol. 55(12), pages 1953-1968, December.
    7. Xuanming Su, 2008. "Bounded Rationality in Newsvendor Models," Manufacturing & Service Operations Management, INFORMS, vol. 10(4), pages 566-589, May.
    8. Chow, Pui-Sze & Wang, Yulan & Choi, Tsan-Ming & Shen, Bin, 2015. "An experimental study on the effects of minimum profit share on supply chains with markdown contract: Risk and profit analysis," Omega, Elsevier, vol. 57(PA), pages 85-97.

    More about this item

    Keywords

    supply chain coordination; industrial organization; experimental economics; coordination dans la chaîne d'approvisionnement; organisation industrielle; économie expérimentale;

    JEL classification:

    • C72 - Mathematical and Quantitative Methods - - Game Theory and Bargaining Theory - - - Noncooperative Games
    • C91 - Mathematical and Quantitative Methods - - Design of Experiments - - - Laboratory, Individual Behavior
    • L1 - Industrial Organization - - Market Structure, Firm Strategy, and Market Performance

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