Research Details

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.

Type

Article

Author(s)

Daniel Spulber

Date Published

1985

Citations

Spulber, Daniel. 1985. Risk Sharing and Inventories. Journal of Economic Behavior and Organization.(1): 55-68.