Abstract The optimal incentive contract concerning the two tasks of retailers’ sales and market knowledge sharing is analyzed by using multitask principal-agent model. It concludes that if each cost function of these two tasks is independent and incentives are compatible, then the optimal performance revenue of the two tasks is also independent; moreover, the optimal motivator is an increasing function of manufacturers’ marginal revenue for each task, but a decreasing function of both retailers’ absolute risk aversion coefficient, the marginal cost change rate of each task and performance variance. Then the concept of efficiency risk is introduced in this paper. If each cost function of these two tasks is dependent and incentives are compatible, the optimal incentive contract concerning sales is a “threshold-based incentive contract”, which is presented quantitatively in this paper. At last, some practical problems, which are prevalent among enterprises in the supply chain, are explained f
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Received: 27 April 2010
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Corresponding Authors:
CHEN Wei
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