Economics at your fingertips  

Optimal Retail Contracts with Asymmetric Information and Moral Hazard

Benjamin F. Blair and Tracy Lewis

RAND Journal of Economics, 1994, vol. 25, issue 2, 284-296

Abstract: Constrained joint-profit-maximizing retail contracts are derived when the dealer is privately informed about demand conditions before contracting with the manufacturer. Demand is increased by dealer promotion, which is unobservable by the manufacturer. Consequently, the manufacturer does not know whether to attribute a low level of sales to a decline in demand or to a lack of promotion. We show that, in general, the optimal contract exhibits some form of resale price maintenance and quantity fixing. The type of resale price maintenance and quantity fixing depends on how price and quantity affect the link between sales and promotion.

Date: 1994
References: Add references at CitEc
Citations View citations in EconPapers (20) Track citations by RSS feed

Downloads: (external link) ... O%3B2-T&origin=repec full text (application/pdf)
Access to full text is restricted to JSTOR subscribers. See for details.

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:

Ordering information: This journal article can be ordered from
https://editorialexp ... i-bin/rje_online.cgi

Access Statistics for this article

More articles in RAND Journal of Economics from The RAND Corporation
Series data maintained by ().

Page updated 2017-09-29
Handle: RePEc:rje:randje:v:25:y:1994:i:summer:p:284-296