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Quality collaboration contracts under product pricing strategies

Author

Listed:
  • Prasenjit Mandal

    (Indian Institute of Management Calcutta)

  • Tarun Jain

    (Indian Institute of Management Bangalore)

  • Abhishek Chakraborty

    (XLRI Xavier School of Management)

Abstract

We study how the manufacturer and the supplier collaborate under various pricing and contracting scenarios. We characterize two downstream pricing strategies: (a) where the manufacturer announces the market price before the quality is determined, and (b) where the manufacturer decides the market price after the quality is determined. We also study three different contracting structures: (a) effort levels are both contractible and verifiable, (b) revenue sharing agreement between manufacturer and supplier, and (c) effort dependent contract when effort levels are verifiable but not contractible. We determine under which conditions the manufacturer should implement each of the scenarios.

Suggested Citation

  • Prasenjit Mandal & Tarun Jain & Abhishek Chakraborty, 2021. "Quality collaboration contracts under product pricing strategies," Annals of Operations Research, Springer, vol. 302(1), pages 231-264, July.
    • Handle: RePEc:spr:annopr:v:302:y:2021:i:1:d:10.1007_s10479-021-04060-w
    DOI: 10.1007/s10479-021-04060-w
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