Split Awards, Procurement, and Innovation

Anton, James J.; Yao, Dennis A.

doi:10.2307/2555732

Cited by 133 publications

(78 citation statements)

References 5 publications

Supporting

Mentioning

Contrasting

Order By: Relevance

“…We follow Bernheim and Whinston (1985), Katz (1989), Anton and Yao (1989), Gal-Or (1991), andZhang (1993) in considering delegated agency (a retailer can choose not to deal with both manufacturers). 9 Of these authors, all but Anton and Yao, however, assume a competitive supply of alternative retailers through which an excluded manufacturer can distribute its goods, and thus do not consider the possibility of market foreclosure.…”

Section: Introductionmentioning

confidence: 99%

“…Anton and Yao (1989) analyze split-award auctions in which the government solicits bids from two producers of homogeneous goods for the right to supply some or all of the government's fixed demand requirement. Because of this requirement, each producer's bid in their model is implicitly contingent not only on the amount the government purchases from it, but also on the amount the government purchases from its rival.…”

Section: Introductionmentioning

confidence: 99%

See 1 more Smart Citation

Nonlinear Supply Contracts, Exclusive Dealing, and Equilibrium Market Foreclosure

O’Brien¹,

Shaffer²

1997

Economics Manag Strategy

View full text Add to dashboard Cite

Section: Introductionmentioning

confidence: 99%

Section: Introductionmentioning

confidence: 99%

Nonlinear Supply Contracts, Exclusive Dealing, and Equilibrium Market Foreclosure

O’Brien¹,

Shaffer²

1997

Economics Manag Strategy

View full text Add to dashboard Cite

“…There are papers that compare sole-sourcing versus dual sourcing, whereas we assume a dual-sourcing strategy has been adopted: e.g., Anton andYao (1989, 1992), Anupindi and Akella (1993), Benjaafar, Elahi, and Donohue (2004), Seshadri (1995), Seshadri, Chatterjee, and Lilien (1991). See Minner (2003) and Elmaghraby (2000) for reviews of the literature on sourcing strategies.…”

mentioning

confidence: 99%

Obtaining Fast Service in a Queueing System via Performance-Based Allocation of Demand

2007

View full text Add to dashboard Cite

Any buyer that depends on suppliers for the delivery of a service or the production of a make-to-order component should pay close attention to the suppliers' service or delivery lead times. This paper studies a queueing model in which two strategic servers choose their capacities/processing rates and faster service is costly. The buyer allocates demand to the servers based on their performance; the faster a server works, the more demand the server is allocated. The buyer's objective is to minimize the average lead time received from the servers. There are two important attributes to consider in the design of an allocation policy: the degree to which the allocation policy effectively utilizes the servers' capacities and the strength of the incentives the allocation policy provides for the servers to work quickly. Previous research suggests that there exists a tradeoff between efficiency and incentives, i.e., in the choice between two allocation policies a buyer may prefer the less efficient one because it provides stronger incentives. We find considerable variation in the performance of allocation policies: Some intuitively reasonable policies generate essentially no competition among servers to work quickly, whereas others generate too much competition, thereby causing some servers to refuse to work with the buyer. Nevertheless, the trade-off between efficiency and incentives need not exist: It is possible to design an allocation policy that is efficient and also induces the servers to work quickly. We conclude that performance-based allocation can be an effective procurement strategy for a buyer as long as the buyer explicitly accounts for the servers' strategic behavior. AbstractAny buyer that depends on suppliers for the delivery of a service or the production of a make-to-order component should pay close attention to the suppliers' service or delivery lead times. This paper studies a queuing model in which two strategic servers choose their capacities/processing rates and faster service is costly. The buyer allocates demand to the servers based on their performance; the faster a server works, the more demand the server is allocated. The buyer's objective is to minimize the average lead time received from the servers. There are two important attributes to consider in the design of an allocation policy: the degree to which the allocation policy effectively utilizes the servers' capacities and the strength of the incentives the allocation policy provides for the servers to work quickly. Previous research suggests that there exists a tradeoff between efficiency and incentives, i.e., in the choice between two allocation policies a buyer may prefer the less efficient one because it provides stronger incentives. We find considerable variation in the performance of allocation policies: some intuitively reasonable policies generate essentially no competition among servers to work quickly whereas others generate too much competition, thereby causing some servers to refuse to work with the buyer. Nevertheless,...

show abstract

“…Many papers on reverse auction or dual sourcing address volume allocations, which is an important aspect of the problem we are studying. Anton and Yao (1989) compare the split-award auction with a winner-take-all auction in a single-stage Nash equilibrium. Klotz and Chatterjee (1995) consider a two-period dual-sourcing model where the buyer reserves a fixed volume share for each supplier and leaves the rest to a competitive bidding in which the lower-cost provider takes all.…”

Section: Related Literaturementioning

confidence: 99%

Dynamic Business Share Allocation in a Supply Chain with Competing Suppliers

Zhang

Fine

2013

Operations Research

View full text Add to dashboard Cite

This paper studies a repeated game between a manufacturer and two competing suppliers with imperfect monitoring. We present a principal-agent model for managing long-term supplier relationships using a unique form of measurement and incentive scheme. We measure a supplier's overall performance with a rating equivalent to its continuation utility (the expected total discounted utility of its future payoffs), and incentivize supplier effort with larger allocations of future business. We obtain the vector of the two suppliers' ratings as the state of a Markov decision process, and solve an infinite horizon contracting problem in which the manufacturer allocates business volume between the two suppliers and updates their ratings dynamically based on their current ratings and the current performance outcome.Our contributions are both theoretical and managerial: We propose a repeated principal-agent model with a novel incentive scheme to tackle a common, but challenging incentive problem in a multi-period supply chain setting. Assuming binary effort choices and performance outcomes by the suppliers, we characterize the structure of the optimal contract through a novel fixed-point analysis.Our results provide a theoretical foundation for the emergence of "business-as-usual" (low effort) trapping states and tournament competition (high effort) recurrent states as the long-run incentive drivers for motivating critical suppliers.

show abstract

Split Awards, Procurement, and Innovation

Cited by 133 publications

References 5 publications

Nonlinear Supply Contracts, Exclusive Dealing, and Equilibrium Market Foreclosure

Nonlinear Supply Contracts, Exclusive Dealing, and Equilibrium Market Foreclosure

Obtaining Fast Service in a Queueing System via Performance-Based Allocation of Demand

Dynamic Business Share Allocation in a Supply Chain with Competing Suppliers

Contact Info

Product

Resources

About