Debt vs. revenue share financing: A theoretical study on revenue share finance in a capital-constrained newsvendor

Yufeng Song and Minghui Jiang

PLOS ONE, 2025, vol. 20, issue 8, 1-20

Abstract: In the capital-constrained newsvendor paradigm, revenue share financing (RSF) presents a novel yet underexplored financing approach. This theoretical study conducts a comparative analysis of two financing methods: traditional debt financing and revenue share financing. Our research findings indicate that the revenue share ratio, cost share ratio, and debt interest rate are the most critical factors influencing retailers’ decisions. This study further demonstrates that, under certain conditions, both financing strategies can yield competitive profit margins and order quantity. Additionally, we discovered that fund providers have a minimum revenue share ratio, whereas for retailers, there is a maximum revenue share ratio. These two ratios establish a bargaining interval within which an optimal revenue share ratio can be achieved if it falls within this range. Outside this range, RSF is either unattainable or impractical.

Date: 2025
References: Add references at CitEc
Citations:

Downloads: (external link)
https://journals.plos.org/plosone/article?id=10.1371/journal.pone.0329561 (text/html)
https://journals.plos.org/plosone/article/file?id= ... 29561&type=printable (application/pdf)

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:plo:pone00:0329561

DOI: 10.1371/journal.pone.0329561

Access Statistics for this article

More articles in PLOS ONE from Public Library of Science
Bibliographic data for series maintained by plosone ().