Monitoring Subcontracting in a Suppliers' Hierarchy

Michela Cella ()

No 172, Working Papers from University of Milano-Bicocca, Department of Economics

Abstract: In this paper we study the delegation of a production process in a three-tier hierarchy. The principal contracts directly only with the supplier that produces the ?rst input leaving him in charge of the contract for the production of the second input. We allow the principal to costlessly monitor the communication between the agents at the subcontracting stage in an attempt to save on informa- tional rents and improve productive e¢ ciency. We show that, if the contractor is free to choose the type of subcontract, he must be given additional incen- tives to acquire information about the subcontractor which will then be object of the monitoring. The monitoring is therefore much less e¤ective then when the principal can force the contractor into choosing her preferred subcontract.

Keywords: Adverse Selection; Hierarchies; Delegation; Monitoring. (search for similar items in EconPapers)
JEL-codes: D20 D82 L22 L51 (search for similar items in EconPapers)
Pages: 29 pages
Date: 2009-07, Revised 2009-07
New Economics Papers: this item is included in nep-cta
References: Add references at CitEc
Citations:

Downloads: (external link)
http://repec.dems.unimib.it/repec/pdf/mibwpaper172.pdf First version, 2009 (application/pdf)

Related works:
Journal Article: Monitoring subcontracting in a suppliers' hierarchy (2011)
Working Paper: Monitoring Subcontracting in a Suppliers` Hierachy (2005)
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:mib:wpaper:172

Access Statistics for this paper

More papers in Working Papers from University of Milano-Bicocca, Department of Economics Contact information at EDIRC.
Bibliographic data for series maintained by Matteo Pelagatti ().