A Supplier's Optimal Quantity Discount Policy Under Asymmetric Information

Charles J. Corbett () and Xavier de Groote
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Charles J. Corbett: The Anderson School at UCLA, 110 Westwood Plaza, Box 951481, Los Angeles, California 90095-1481
Xavier de Groote: INSEAD, Fontainebleau, France

Management Science, 2000, vol. 46, issue 3, 444-450

Abstract: In the supply-chain literature, an increasing body of work studies how suppliers can use incentive schemes such as quantity discounts to influence buyers' ordering behaviour, thus reducing the supplier's (and the total supply chain's) costs. Various functional forms for such incentive schemes have been proposed, but a critical assumption always made is that the supplier has full information about the buyer's cost structure. We derive the optimal quantity discount policy under asymmetric information and compare it to the situation where the supplier has full information.

Keywords: supply contracts; coordination; lot sizing; quantity discounts; asymmetric information (search for similar items in EconPapers)
Date: 2000
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Citations: View citations in EconPapers (149)

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