Incentives through inventory control in supply chains

Zhan Qu, Horst Raff and Nicolas Schmitt

International Journal of Industrial Organization, 2018, vol. 59, issue C, 486-513

Abstract: 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 especially for 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 (search for similar items in EconPapers)
JEL-codes: L11 L12 L22 L81 (search for similar items in EconPapers)
Date: 2018
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (7)

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Related works:
Working Paper: Incentives through Inventory Control in Supply Chains (2017)
Working Paper: Incentives through Inventory Control in Supply Chains (2017)
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Persistent link: https://EconPapers.repec.org/RePEc:eee:indorg:v:59:y:2018:i:c:p:486-513

DOI: 10.1016/j.ijindorg.2018.06.001

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