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Tecnhnology estimation for quality pricing in supply-chain relationships

Angelo Zago

No 27/2005, Working Papers from University of Verona, Department of Economics

Abstract: The paper designs an optimal payment system for a group of producers implementing it empirically. It shows how to implement the first best through higher prices for better quality commodities, deriving the optimal pricing schedule. It also takes into account producers' heterogeneity by modelling inefficiency and illustrating how technical efficiency interacts with producers' ability to produce output for a given level of inputs and hence affects revenues. The technology and the technical efficiency of producers are then estimated with a stochastic production function model. The estimation results are then used to simulate the pricing scheme.

Keywords: Quality; optimal contract; nonlinear pricing; stochastic frontier analysis. (search for similar items in EconPapers)
JEL-codes: C21 C61 D21 D24 Q13 (search for similar items in EconPapers)
Date: 2005-09
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