Narrow Results

Conducting product recovery and remanufacturing not only help manufacturers decrease the unit cost of production, but also benefit the environment. However, most manufacturers are hampered by the huge initial investment of related operations. In order to alleviate the manufacturers’ financial pressure of product recovery and remanufacturing, some governments implement the production subsidy (subsidy P) and recycling subsidy (subsidy I). Meanwhile, retailers can provide the revenue-sharing contract (contract S) and cost-sharing contract (contract C). Hence, this paper mainly studies the incentive designs of the government and retailer, and the effects of these incentives on the closed-loop supply chain. We first establish a Stackelberg game model consisting of a government, a manufacturer and a retailer, then investigate and compare the optimal decisions and payoffs of each member under each incentive combination of the government and retailer. Our results first show that, on the other hand, the government’s subsidy type cannot affect the retailer’s design of contract C, but subsidy I can induce the retailer to share a higher rate of sale revenue, comparing to subsidy P. On the other hand, the retailer’s contract S could induce the government to increase subsidy rate in most cases, comparing to contract C. Second, the subsidy P can always lead to a higher collection rate, lower wholesale and retail prices, and higher payoffs for the government, manufacturer and retailer, comparing to subsidy I. Besides, under subsidy I, contract S always leads to a higher collection rate, lower wholesale and retail prices, and higher payoffs for the government, manufacturer and retailer, comparing to contract C. However, under subsidy P, contract S can lead to a higher collection rate, a lower wholesale price, and higher payoffs for the manufacturer and retailer, comparing to contract C only when the manufacturer’s recovery efficiency is high. Moreover, the retail price is always higher and the government payoffs is always lower under contract C. Third, the government prefers to implement the subsidy P and then which contract is chosen by the retailer depends on the collection efficiency of the manufacturer. Therefore, subsidy P combining with contract S or C is the equilibrium incentive combination.

If e-business contracts are to be widely used, they need to be supported by the IT infrastructure of the organizations concerned. This implies that the interactions between systems in different organizations must be guided by the contract and there must be sufficiently strong checks and balances to ensure that the contract is in fact obeyed. This includes facilities for the unbiased monitoring of correct behaviour and the reporting of exceptions.

One of the ways to provide this support is to generate it directly from the agreed contract. This paper considers the steps necessary to provide sufficient automation in the support and checking of e-Business contracts for them to offer efficiency gains and so to become widely used. It focuses on the role of models, taking a model-driven approach to development and discussing both the source and target models and the transformational pathways needed to support the contract-based business processes.

During the life cycle of a service consumer-provider relationship, agreements are reached in a variety of areas covering technical, service, business and legal issues. Although some of these agreements may be viewed as legally binding, it is unlikely that any of them will constitute a legal contract in the full sense of the word. It is often expedient to gather these agreements and create a legal contract out of them. Automating this process of contract generation can speed up the process and reduce the cost of legal expenses. In fact, the process of automated contract generation can also be useful outside the realm of web services, when agreements are made directly among people.

We propose a way of transforming such agreements into contracts in a dynamic, efficient and speedy manner, using advanced forms of matchmaking technology in a novel way. This complements the other directions in which the agreements are to be used, namely configuration, instantiation, enactment supervision and relationship termination and evaluation.

Reference to the notions of verifiability and observability is widespread in contract theory. This paper is a contribution towards a formalization, and related characterizations, of these two notions. In particular we first define them, through knowledge operators, and then provide characterization results in terms of the relevant state spaces. Since, when referring to a contract, observability typically pertains to parties while verifiability to the court, we define them differently. A main finding of the paper is that for proper contract verifiability to obtain the court must imagine true states and have information processing abilities as good as the parties.

Suppose that one party proposes to another a contract for sharing an uncertain profit which maximizes the former’s expected utility, with respect to its beliefs, subject to a constraint on the latter’s expected utility, with respect to the latter’s beliefs. It turns out that the optimal contract, which we find, can be nonmonotone, as well as nonlinear, in the realized profit. To avoid the implausible lack of monotonicity, we formulate and solve a model constrained to have monotone increasing profits for both partners. If beliefs are identical, the (unconstrained) contract is shown to be monotone, and under certain conditions, linear. That might explain one famous contract from the history of jazz. If the other party can be assumed risk neutral, the linear contract reduces to the former receiving a constant amount, and the latter the residual net profit, as in the case of another famous contract from the history of jazz. Since in the type of partnerships, we have in mind the partners are always motivated to exert high effort due to other factors like reputation, our setting has no moral hazard or adverse selection, and the partnerships do not involve a large initial investment.

Matching models with contracts have been extensively studied in the last years as a generalization of the classical matching theory. Matching in networks is an even more general model in which firms trade goods via bilateral contracts constituting a supply chain. Hatfield and Kominers ([2012] Matching in networks with bilateral contracts, Am. Econ. J., Microecon. 4(1), 176–208, doi:10.1257/mic.4.1.176) showed that a natural substitutability condition characterizes the maximal domain of firm preferences for which the existence of stable allocations is guaranteed in such a model, if the set of all existent contracts is acyclic. Moreover, they asserted that these conditions are sufficient to obtain a suitable lattice structure for the set of all stable allocations. In this paper, we exhibit an inconsistency in the last point through an example, and introduce an additional condition over firm preferences that allows to recover an appropriate lattice structure.

Currently, all major IT and telecom firms are busy trying to stimulate non-contractual complementary developments around their own core competences and offerings. But little has been done to explain the logic, strengths, and weaknesses of non-contractual innovation. The literature on open-platform leadership recognises the importance of non-contractual innovation, but only within the limited confines of a normative approach based on two implicit assumptions: that a platform's core and periphery are sharply and easily differentiated and that platforms are always grown and orchestrated from a monolithic core. Through analysis of two cases of decentralised open innovation: the emergence of video rental stores and the emergence of desktop-publishing systems. I argue that these assumptions do not apply to all open platforms. I conclude that by forcing a hierarchical framework onto the analysis, the normative approach underplays the role of non-contractual innovation and turns a blind eye to the radically self-organised and unforeseeable nature of some platforms' success.

The purpose of this paper is to enhance understanding of the development of trust during commercial product development collaboration. It elaborates on a performance-based conception of trust by analyzing the history of cooperation between two biotechnology firms. The means and mechanisms of trust formation in the different phases of this collaboration relationship are examined. The paper concludes that secrecy, collaborative and licensing contracts were necessary precautionary measures needed by the firms to move from one phase of collaboration to another. They contributed to the formation of intentional trust between the companies but had no role in creating competence trust between them. In contrast to this, actions directly related to product development work and marketing, such as training courses, feedback from clients, parallel testing, performing the agreed duties and keeping schedules, played a key role in the formation of competence trust.

The following sections are included:

• Introduction

• Why are wholesale electricity trading arrangements needed?

• Wholesale trading arrangements – principles, objectives and issues

• Characterisation of wholesale trading arrangements – three generic models
  • Mandatory pooling
  • Bilateral contracting and residual trading
  • Nodal pricing

• Competing wholesale trading options for Europe – which to choose?

Suppose that one party proposes to another a contract for sharing an uncertain profit which maximizes the former’s expected utility, with respect to its beliefs, subject to a constraint on the latter’s expected utility, with respect to the latter’s beliefs. It turns out that the optimal contract, which we find, can be nonmonotone, as well as nonlinear, in the realized profit. To avoid the implausible lack of monotonicity, we formulate and solve a model constrained to have monotone increasing profits for both partners. If beliefs are identical, the (unconstrained) contract is shown to be monotone, and under certain conditions, linear. That might explain one famous contract from the history of jazz. If the other party can be assumed risk neutral, the linear contract reduces to the former receiving a constant amount, and the latter the residual net profit, as in the case of another famous contract from the history of jazz. Since in the type of partnerships, we have in mind the partners are always motivated to exert high effort due to other factors like reputation, our setting has no moral hazard or adverse selection, and the partnerships do not involve a large initial investment.

The policy debate between multinational firms favoring strong contract law, and host-country governments who often oppose such protection motivates the paper. Local agents (managers) learn the multinational’s technology and can defect to start a rival firm. Contract enforcement, including binding the multinational itself, makes the multinational better off. Outcomes for the host country are more complex, depending on mode switches induced by enforcement. If enforcement induces the multinational to switch from exporting to local production, welfare improves. If local production was occurring anyway, enforcement may result in the loss of rents to local agents and lower welfare.