Trade credit model with customer balking and asymmetric market information

Baofeng Zhang, Desheng Dash Wu and Liang Liang

Transportation Research Part E: Logistics and Transportation Review, 2018, vol. 110, issue C, 31-46

Abstract: Customer balking exists in many industries, and would significantly impact the supply chain management. We consider trade credit, customer balking behavior and market information asymmetry and information sharing in a two-level supply chain. Stackelberg equilibriums are derived in each scenario, respectively. The wholesale price and order quantity at equilibrium decrease (increase) in balking threshold (balking probability) when the production cost is not relatively low. The retailer benefits from the manufacturer’s pessimism with information asymmetry, while the optimism with information sharing. However, information asymmetry always harms the manufacturer. We design an information-dependent-credit-limited contract to enforce the retailer to share information.

Keywords: Capital constraint; Trade credit; Supply chain; Customer balking; Information asymmetry (search for similar items in EconPapers)
Date: 2018
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Citations: View citations in EconPapers (24)

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DOI: 10.1016/j.tre.2017.10.006

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