Purpose: This paper compares the efficiency of two revenue-sharing contracts and discusses the members' preference for a three-echelon supply chain with the retailer's different risk attitude. Design/methodology/approach: This paper focuses on a three-echelon supply chain with a manufacturer, a...

Suppliers often make proactive investments in capacity to strategically position themselves to win a contract with a monopolist buyer. Such investments reduce the suppliers' variable costs of serving the buyer's demand. We show that an auction mechanism does not always benefit the...