Recent applications of game-theoretic analysis to supply chain efficiency have focused on constructs between a buyer (the retailer or manufacturer) and a seller (the supplier) in successive stages of a supply chain. If demand for the final product is stochastic then the supplier has an incentive to keep its capacity relatively low to avoid creating unneeded capacity. The manufacturer, on the ot...

Trust is vital for market development, but how can trust be enhanced in an online marketplace? A common view is that more trusting of buyers may help to build seller trustworthiness. This paper highlights a possibility that encouraging buyer trusting may lower seller trustworthiness in equilibrium. In particular, we set up a rational expectation model in which a marketplace uses buyer protectio...

In the environment of business‐to‐business e‐commerce, Buyers and sellers in mature industrial markets can turn single transactions into long-term beneficial relationships by a deeper understanding of the complex connection between the two and buyers and sellers are uncertain about their roles. A “must-do” for the sellers, in particular, is to understand patterns of investment and reward,...

We study a model in which heterogenous agents first form a trading network where link formation is costless. Then, a seller and a buyer are randomly selected among the agents to bargain through a chain of intermediaries. We determine both the trading path and the allocation of the surplus among the seller, the buyer and the intermediaries at equilibrium. We show that a trading network is pairwi...

We model new experience goods in the context of dynamic mechanism design. These are goods for which an agent is unsure of her valuation but can learn it through consumption experience. We consider a dynamic environment with a single buyer and seller in which contracting occurs over T periods, where each time the agent consumes the object, she receives a signal which allows her to revise her val...

This article characterizes the conditions under which holdout (i.e. bargaining inefficiency) may, or may not be significant in a two-sided, one-buyer-many-seller model with complementarity. Our central result is that the severity of holdout (i.e. inefficiency) is critically dependent on three factors, (a) the transparency of the bargaining protocol, (b) the outside option of the buyer, and (c) ...

In addition to internal R&D, external knowledge is widely considered as an essential lever for innovative performance. This paper analyzes knowledge spillovers in supply chain networks. Specifically, we investigate how supplier innovation is impacted by buyer innovation. Financial accounting data is combined with supply chain relationship data and patent data for U.S. firms in high tech industr...

This paper analyzes a bilateral trade model where the buyer can choose any cumulative distribution function (CDF) supported on [0, 1], which then determines her valuation. The seller, after observing the buyer’s choice of the CDF but not its realization, gives a takeit-or-leave-it offer to the buyer. We characterize the unique equilibrium outcome of this game and show that in this outcome, the ...

This paper investigates the extent of the holdup underinvestment problem in a buyer-seller relationship in which the seller has private information about his alternative trading opportunities. Theory predicts that, compared with a situation in which outside options are publicly observed, the seller obtains an informational rent while the buyer bears an informational loss. As a result the seller...