EconPapers    
Economics at your fingertips  
 

Innovation and waste in supply chain management

Martin Peitz and Dongsoo Shin ()

Journal of Economic Behavior & Organization, 2013, vol. 86, issue C, 191-199

Abstract: We study a supply chain relationship in which the buyer outsources production of a component to the supplier. The buyer also produces a component and combines it with the supplier's input to yield the final output. The supplier can upgrade production of his input via costly innovation. Neither the supplier's effort for innovation nor the result of the innovative activity can be publicly verified. We show that, when the cost of innovation is large, the buyer's optimal contract may induce ‘wasting’ a fraction of the supplier's input.

Keywords: Agency; Innovation; Supply chain; Waste (search for similar items in EconPapers)
JEL-codes: D82 D86 L23 (search for similar items in EconPapers)
Date: 2013
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (1) Track citations by RSS feed

Downloads: (external link)
http://www.sciencedirect.com/science/article/pii/S0167268112002594
Full text for ScienceDirect subscribers only

Related works:
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:eee:jeborg:v:86:y:2013:i:c:p:191-199

DOI: 10.1016/j.jebo.2012.11.013

Access Statistics for this article

Journal of Economic Behavior & Organization is currently edited by Houser, D. and Puzzello, D.

More articles in Journal of Economic Behavior & Organization from Elsevier
Bibliographic data for series maintained by Nithya Sathishkumar ().

 
Page updated 2021-06-09
Handle: RePEc:eee:jeborg:v:86:y:2013:i:c:p:191-199