This paper studies the consequences of sales contests versus quota systems when territories have imbalanced sales potential. How do the optimal sales, efforts of salespeople, and profits vary with territory imbalance in a sales contest and how do these change if compensation is based upon...

Manufacturers can stimulate sales by a temporary wholesale price reduction for the retailer, a rebate directed toward consumers, or a combination of both. The trade-offs between these price promotions are analyzed, providing insights about their roles, profitability, and welfare properties....