Channel Performance Under Consignment Contract with Revenue Sharing
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Machine scores (provisional)
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- Teacher spread
- 0.191 · how far apart the two teachers sit on this one work
- Validation status
score_only:v0-immature-baseline· verbatim from the scoring run: score_only means the number may rank works, and no category label ships from it
Abstract
Under a consignment contract with revenue sharing, a supplier decides on the retail price and delivery quantity for his product, and retains ownership of the goods; for each item sold, the retailer deducts a percentage from the selling price and remits the balance to the supplier. In this paper we show that, under such a contract, both the overall channel performance and the performance of individual firms depend critically on demand price elasticity and on the retailer's share of channel cost. In particular, the (expected) channel profit loss, compared with that of a centralized system, increases with demand price elasticity and decreases with retailer's cost share, while the profit share extracted by the retailer decreases with price elasticity and increases with retailer's cost share. With an iso-price-elastic demand model, we show that the channel profit loss cannot exceed 26.4%, and that the retailer's profit share cannot be below 50%. When price elasticity is low, or when the retailer's cost share approaches 100%, or both, the retailer can extract nearly all the channel profit that is almost equal to the centralized channel profit.
Fetched live from OpenAlex and de-inverted. Abstracts are not stored in this database: the inverted indexes are 8.6 GB of the frame’s 9.3 GB of text, and the host has 13 GB free.
The record
- Venue
- Management Science
- Topic
- Supply Chain and Inventory Management
- Field
- Business, Management and Accounting
- Canadian institutions
- —
- Funders
- University of California, IrvineMcGill UniversityWashington University in St. Louis
- Keywords
- ConsignmentPrice elasticity of demandProfit (economics)MicroeconomicsRevenue sharingBusinessRevenueElasticity (physics)Channel (broadcasting)Channel coordinationProfit sharingIndustrial organizationEconomicsSupply chainSupply chain managementFinanceMarketingComputer scienceTelecommunications
- Has abstract in OpenAlex
- yes