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Preventing Factory Fires through Contracts: Case study of Garment Factories in Bangladesh

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  • Sato, Hideki

Abstract

Following a multi-decade history of lethal fires in the Bangladeshi garment industry, Sato (2012) proposed a contract framework that encourages manufacturers to adopt measures that reduce loss of life. Apart from the humanitarian imperative, the manufacturer has an incentive to sign the contract and adopt its preventative measures because an industrial disaster will cancel its relationship with its global retailer and end the related profits. This theoretical study specifies the optimal contract that incentivizes manufacturers and reduces the occurrence of garment industry fires.

Suggested Citation

  • Sato, Hideki, 2015. "Preventing Factory Fires through Contracts: Case study of Garment Factories in Bangladesh," MPRA Paper 64023, University Library of Munich, Germany.
    • Handle: RePEc:pra:mprapa:64023
    as

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    File URL: https://mpra.ub.uni-muenchen.de/64023/1/MPRA_paper_64023.pdf
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    References listed on IDEAS

    as
    1. Sato, Hideki, 2012. "Protecting Against Disaster with Contracts," MPRA Paper 45690, University Library of Munich, Germany.
    Full references (including those not matched with items on IDEAS)

    Most related items

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    1. Sato Hideki, 2015. "Preventing Factory Fires through Contracts: Case study of Garment Factories in Bangladesh," International Journal of Business and Social Research, LAR Center Press, vol. 5(4), pages 9-13, April.
    2. Sato Hideki, 2015. "Preventing Factory Fires through Contracts: Case study of Garment Factories in Bangladesh," International Journal of Business and Social Research, MIR Center for Socio-Economic Research, vol. 5(4), pages 9-13, April.
    3. Sato, Hideki, 2014. "Cournot Competition and Reduction of Corruption to Prevent Garment Factory Fires in Bangladesh," MPRA Paper 56526, University Library of Munich, Germany, revised 09 Jun 2014.

    More about this item

    Keywords

    Garment factory fires; Safety measures; Retailer; Optimal contract;
    All these keywords.

    JEL classification:

    • D62 - Microeconomics - - Welfare Economics - - - Externalities
    • D82 - Microeconomics - - Information, Knowledge, and Uncertainty - - - Asymmetric and Private Information; Mechanism Design
    • L67 - Industrial Organization - - Industry Studies: Manufacturing - - - Other Consumer Nondurables: Clothing, Textiles, Shoes, and Leather Goods; Household Goods; Sports Equipment

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