Hwang, Iny; Radhakrishnan, Suresh; Lixin (Nancy) Su - In: Management Science 52 (2006) 10, pp. 1472-1482
We examine the buyer's problem of inducing the supplier's quality effort using two arrangements: the appraisal regime and the certification regime. In the appraisal regime, the buyer inspects the units supplied and either charges a penalty for defective units identified during inspection or pays...