Three essays on procurement under bargaining and asymmetric information.

Abstract

This dissertation focuses on how information asymmetry and bargaining power affect procurement decisions in supply chains. Both information asymmetry and bargaining power are of great importance in practice. It is rare that buyers and suppliers know all relevant data about each others' costs, demands or qualities. Yet, most supply chain management literature to date assumes common knowledge of this information. It is also rare that firms specify all purchasing conditions in a prior procurement contract. Further negotiation is necessary and firms do not come to this negotiation with equal bargaining power. This dissertation is concerned with modeling these complex phenomena and obtaining significant managerial insights on how firms' private information or bargaining power affect their pricing, production, and sourcing decisions. Its main findings should be of interest to managers; it is shown in various business contexts that there are cases where too much private information or too much bargaining power can hurt firms rather than help them.