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Various contracts can be designed to coordinate a simple supplier–retailer channel, yet the contracts proposed in prior research and tested in a laboratory setting do not perform as standard theory predicts. The supplier, endowed with all bargaining power, can neither fully coordinate the...
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wholesale price contract, and each retailer must choose his own retail price if he accepts the supplier's wholesale price offer …
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rationality, that aims to explain rejections. When fairness considerations are private information, we derive an optimal contract … and characterize conditions in which this optimal contract implies rejections. Thus, our major finding is that when …
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