Article ID: | iaor200965 |
Country: | Netherlands |
Volume: | 178 |
Issue: | 3 |
Start Page Number: | 782 |
End Page Number: | 788 |
Publication Date: | May 2007 |
Journal: | European Journal of Operational Research |
Authors: | Anand Paul, Bose Indranil |
We contribute to current research on single-period returns policies by making a clear distinction between models in which transfer price is exogenous and models in which one dominant party unilaterally declares a price. We compare the equilibrium contracts that result from these two approaches and derive conditions for the equilibrium returns policy to be Pareto-efficient when transfer price is exogenous. Our main result is distribution free, but we make some interesting observations on channel performance when demand is uniformly distributed.