Stackelberg equilibria in a continuous-time vertical contracting model with uncertain demand and delayed information

We consider explicit formulas for equilibrium prices in a continuous time vertical contracting model. A manufacturer sells goods to a retailer, and the objective of both parties is to maximize expected profits. Demand is an Itô-Lévy process, and to increase realism information is delayed. We provide complete existence and uniqueness proofs for a series of special cases, including geometric Brownian motion and the Ornstein-Uhlenbeck process, both with time-variable coefficients. Moreover, these results are operational because we are able to offer explicit solution formulas. An interesting finding is that information that is more precise may be a considerable disadvantage for the retailer.