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Incentives through Inventory Control in Supply Chains

19th June 2018
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Authors: Zhan Qu, Horst Raff and Nicolas Schmitt (International Journal of Industrial Organization, 2018, Vol. 59, 486-513)

The paper shows that taking inventory control out of the hands of competitive or exclusive retailers and assigning it to a manufacturer increases the value of a supply chain especiallyfor goods whose demand is highly volatile. This is because doing so solves incentive distortions that arise when retailers have to allocate inventory across sales periods, and thus allows for better intertemporal price discrimination. Assigning inventory control to a manufacturer is also shown to have effects on total inventory and social welfare.

 

Keywords: inventory, supply chain, demand uncertainty, storable good, price discrimination

JEL Classification: L11, L12, L81

 

DOI: https://doi.org/10.1016/j.ijindorg.2018.06.001


Involved Team members

  • Prof. Horst Raff, Ph.D.

Projects

Project 1
Cross-cultural differences in the perception of corporate social responsibility and consumer social responsibility along global supply chains
Project 1
Experimental studies of moral responsibility in global supply chains
Project 1
Modelling economic and social dimensions of global supply chains
Project 1
Global supply chains, environmental regulation and green innovation

Other Projects

Cross-cultural differences in the perception of corporate social responsibility and consumer social responsibility along global supply chains Experimental studies of moral responsibility in global supply chains
Modelling economic and social dimensions of global supply chains Global supply chains, environmental regulation and green innovation Further KCG Projects

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