Commission-Rate vs. Fixed-Fee Contract in a Supply Chain of Mobile Apps Involving Risk

Tal Avinadav; Priel Levy

doi:https://doi.org/10.1016/j.ifacol.2024.09.109

Commission-Rate vs. Fixed-Fee Contract in a Supply Chain of Mobile Apps Involving Risk

Tal Avinadav, Priel Levy

Department of Management

Bar-Ilan University

Research output: Contribution to journal › Conference article › peer-review

Abstract

We consider a supply chain of a mobile app consisting of a platform and a developer, where demand is uncertain and is affected by the both the selling price and the quality level of the app. Two types of contract are investigated, based on the commission scheme stipulated by the platform: commission rate and fixed fee. For each contract type, we derive closed-form expressions for equilibrium assuming that the parties are risk sensitive. For the case of risk-neutral parties, we provide a numerical comparison.

Original language	English
Pages (from-to)	1144-1149
Number of pages	6
Journal	IFAC-PapersOnLine
Volume	58
Issue number	19
DOIs	https://doi.org/10.1016/j.ifacol.2024.09.109
State	Published - 1 Aug 2024
Event	18th IFAC Symposium on Information Control Problems in Manufacturing, INCOM 2024 - Vienna, Austria Duration: 28 Aug 2024 → 30 Aug 2024

Keywords

commission-rate contract
digital supply chain
fixed-fee contract
pricing
quality
risk sensitivity

All Science Journal Classification (ASJC) codes

Control and Systems Engineering

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https://doi.org/10.1016/j.ifacol.2024.09.109

Cite this

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abstract = "We consider a supply chain of a mobile app consisting of a platform and a developer, where demand is uncertain and is affected by the both the selling price and the quality level of the app. Two types of contract are investigated, based on the commission scheme stipulated by the platform: commission rate and fixed fee. For each contract type, we derive closed-form expressions for equilibrium assuming that the parties are risk sensitive. For the case of risk-neutral parties, we provide a numerical comparison.",

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AB - We consider a supply chain of a mobile app consisting of a platform and a developer, where demand is uncertain and is affected by the both the selling price and the quality level of the app. Two types of contract are investigated, based on the commission scheme stipulated by the platform: commission rate and fixed fee. For each contract type, we derive closed-form expressions for equilibrium assuming that the parties are risk sensitive. For the case of risk-neutral parties, we provide a numerical comparison.

KW - commission-rate contract

KW - digital supply chain

KW - fixed-fee contract

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DO - https://doi.org/10.1016/j.ifacol.2024.09.109

M3 - مقالة من مؤنمر

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JO - IFAC-PapersOnLine

JF - IFAC-PapersOnLine

IS - 19

T2 - 18th IFAC Symposium on Information Control Problems in Manufacturing, INCOM 2024

Y2 - 28 August 2024 through 30 August 2024

ER -

Commission-Rate vs. Fixed-Fee Contract in a Supply Chain of Mobile Apps Involving Risk

Abstract

Keywords

All Science Journal Classification (ASJC) codes

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