Risk sharing and inventories

Daniel F. Spulber*

*Corresponding author for this work

Research output: Contribution to journalArticlepeer-review

11 Scopus citations

Abstract

The paper shows how various features of market organization, such as existence of retail chains, the centralized warehousing of inventories by wholesalers, and the arrangements whereby suppliers partially reimburse sellers for unsold inventories can be explained in terms of optimal contracts for sharing the risks of excess inventories. When retailers face heterogeneous demands, the paper demonstrates the optimality of shared inventories and obtains optimal incentive properties for the risk sharing policy.

Original languageEnglish (US)
Pages (from-to)55-68
Number of pages14
JournalJournal of Economic Behavior and Organization
Volume6
Issue number1
DOIs
StatePublished - Mar 1985

ASJC Scopus subject areas

  • Economics and Econometrics
  • Organizational Behavior and Human Resource Management

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