Essays on the Role of Competition in Operations Management

Essays on the Role of Competition in Operations Management

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We also study supply chain contracting with investment in demand forecasting under downstream competition. Supporting some recent industry observations, we show that under common pricing schemes, such as wholesale price or two-part tariff, downstream firms overinvest in demand forecasting. Analyzing the bounds and determinants of overinvestment, we demonstrate that the wholesale price and two-part tariff schemes can result in overinvestment up to twice the optimal level. As a result, the supply chain surplus can also suffer substantially as the wholesale price and two-part tariff schemes can result in nearly a full loss of supply chain efficiency. Further the losses with the best contracting scheme in the class of quadratic contracts, which also include the wholesale price and two-part tariff contracts, can amount to as much as half the first-best supply chain surplus. We propose a qmarket-basedq contracting scheme that fully coordinates the supply chain in quantities and demand forecast investment, and demonstrate its desirable properties for implementability. Finally, we explore the role of observability of demand forecast investments, showing that in that case a uniform price auction is needed to fully coordinate the supply chain.We also study supply chain contracting with investment in demand forecasting under downstream competition.


Title:Essays on the Role of Competition in Operations Management
Author:
Publisher:ProQuest - 2008
ISBN-13:

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