During development of an innovative product there is often considerable uncertainty about component production cost, and it is of interest for both the manufacturer and the supplier to engage in a collaborative effort to reduce this uncertainty and lower the expected cost. Despite the obvious...

Performance-based contracts (PBC) have become ubiquitous in industries ranging from aerospace and defense to computer support services. Despite advantages of paying for performance under PBC that have been highlighted in many previous studies, the more traditional Transaction-based Contracts...