About this Journal Submit a Manuscript Table of Contents
Discrete Dynamics in Nature and Society
Volume 2014 (2014), Article ID 380142, 6 pages
http://dx.doi.org/10.1155/2014/380142
Research Article

Incentive Contract in Supply Chain with Asymmetric Information

1Statistics School, Southwestern University of Finance and Economics, Chengdu 611130, China
2Business School, Sichuan University, Chengdu 610064, China

Received 28 June 2013; Revised 20 November 2013; Accepted 18 December 2013; Published 5 January 2014

Academic Editor: Tinggui Chen

Copyright © 2014 Yingsheng Su et al. This is an open access article distributed under the Creative Commons Attribution License, which permits unrestricted use, distribution, and reproduction in any medium, provided the original work is properly cited.

Abstract

The supply chain always appears inefficient because of the different targets of members and information asymmetry, especially when upstream enterprises not only hide information about their effort levels, but also hide information about their technology level. The paper uses principal-agent theory and the theory of regulation to design the contract to realize the maximization of principal's profit on the condition that the contract satisfies the participant and incentive conditions of agent. As a result, it is obvious that the contract achieves the goal of control. In addition, it also can be concluded that the amount of rent that the manufacturer can obtain is up to the value of his information and the condition of his resource.