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Monitoring Subcontracting in a Suppliers` Hierachy

Abstract:

In this paper we study the delegation of a production process in a three-tier hierarchy. The principal contracts directly only with the supplier that produces the …rst input leaving him in charge of the contract for the production of the second input. We allow the principal to costlessly monitor the communication between the agents at the subcontracting stage in an attempt to save on informa- tional rents and improve productive e¢ ciency. We show that, if the contractor is free to choose the ...

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Volume:
233
Series:
Discussion paper series
Publication date:
2005-01-01
URN:
uuid:4515c59d-4b69-472f-9cd6-da457bd77b7c
Local pid:
ora:1272
Language:
English

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