Risk sharing and inventories

Daniel F. Spulber

doi:10.1016/0167-2681(85)90024-1

Risk sharing and inventories

Daniel F. Spulber^*

^*Corresponding author for this work

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Research output: Contribution to journal › Article › peer-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 language	English (US)
Pages (from-to)	55-68
Number of pages	14
Journal	Journal of Economic Behavior and Organization
Volume	6
Issue number	1
DOIs	https://doi.org/10.1016/0167-2681(85)90024-1
State	Published - Mar 1985

ASJC Scopus subject areas

Economics and Econometrics
Organizational Behavior and Human Resource Management

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