Choosing a transport contract over multiple periods
Xavier Brusset ()
MPRA Paper from University Library of Munich, Germany
We offer a shipper and a carrier the choice among three contracts in which to frame their relationship. Both can also take recourse in the transport spot market. Demand and price on the spot market are dependent exogenous stochastic processes. We model the outcome of this endogenous choice of contract. The results, given in closed form, are different from those presented in the literature. Using numeric instances, we show how a choice is made and which contract would be preferred. Comparison on the variance of the economic returns are offered. The conclusions are applicable when the carrier is not capacity constrained.
Keywords: transport; stochastic process; MPC; minimum purchase commitment; quantity flexibility; relational contract (search for similar items in EconPapers)
JEL-codes: L14 C02 C73 C72 (search for similar items in EconPapers)
Date: 2009-01-09, Revised 2009-01-09
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Published in International Journal Logistics Systems and Management 2-3.5(2009): pp. 273-322
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Persistent link: https://EconPapers.repec.org/RePEc:pra:mprapa:18392
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