Translated Title
Incentives and Coordination in Supply Chain Based on Virtual-third Party
Translated Abstract
To solve the adverse selection and moral hazard when the supplier hides its information about produc -tion cost, and the retailer hides its action about sales effort , a virtual-third party is introduced as a coordination body to implement double incentives on the basis of principal agent theory .And respectively from the perspective of supplier and retailer, a contract is designed to incent the supplier to tell the truth and the retailer to work hard.The results show that if there is only moral hazard , the perfect coordination of the supply chain could be realized by the contract as expression (16).However, if there is not only moral hazard but also adverse selec-tion, the coordination of the supply chain could be achieved only when the contract parameter has a constant val -ue.And this value is related to the trading volumeq and the supplier ’s production costc(as expression(29)).Moreover, the supplier is encouraged to cut its production cost and the retailer is incented to improve the effort level, so the “win-win” result is reached.Finally, a numerical example is given to illustrate application of this model.
Translated Keyword
bilateral asymmetric information
incentives and coordination
principal agent
supply chain
virtual-third party
Access Number
WF:perioarticalycygl201303030
