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Transport contract optimization under information asymmetry: an example

Author

Listed:
  • 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.

Suggested Citation

  • Xavier Brusset & Nico Temme, 2005. "Transport contract optimization under information asymmetry: an example," Econometrics 0512005, University Library of Munich, Germany.
    • 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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    File URL: https://econwpa.ub.uni-muenchen.de/econ-wp/em/papers/0512/0512005.pdf
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    References listed on IDEAS

    as
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    Full references (including those not matched with items on IDEAS)

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    Cited by:

    1. Berling, Peter & Eng-Larsson, Fredrik, 2016. "Pricing and timing of consolidated deliveries in the presence of an express alternative: Financial and environmental analysis," European Journal of Operational Research, Elsevier, vol. 250(2), pages 590-601.

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    More about this item

    Keywords

    supply chain management; coordination; information sharing; decision anylisis; bivariate statistics;
    All these keywords.

    JEL classification:

    • C44 - Mathematical and Quantitative Methods - - Econometric and Statistical Methods: Special Topics - - - Operations Research; Statistical Decision Theory
    • C61 - Mathematical and Quantitative Methods - - Mathematical Methods; Programming Models; Mathematical and Simulation Modeling - - - Optimization Techniques; Programming Models; Dynamic Analysis
    • L14 - Industrial Organization - - Market Structure, Firm Strategy, and Market Performance - - - Transactional Relationships; Contracts and Reputation
    • L23 - Industrial Organization - - Firm Objectives, Organization, and Behavior - - - Organization of Production

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