Retailer-Direct Financing Contracts Under Consignment

• 成果类型: Article
• 署名作者: Gupta, Diwakar; Chen, Yibin
• 署名单位: University of Texas System; University of Texas Austin; Huawei Technologies
• 刊物名称: M&SOM-MANUFACTURING & SERVICE OPERATIONS MANAGEMENT
• ISSN/ISSBN: 1523-4614
• DOI: 10.1287/msom.2018.0754
• 发表日期: 2020
• 页码: 528-544
• 关键词: retailer-direct financing; Bank financing; debt seniority

摘要

Problem definition: Many small businesses (suppliers) use web platforms (retailers) to sell their products on a consignment basis. Suppliers are often financially constrained, which affects their profits. Academic/practical relevance: We derive the equilibrium terms of the loan that a retailer will offer to a supplier in a consignment selling environment and their implications for supply chain efficiency. Our model is inspired by the lending program initiated by a major web platform owner. Methodology: We formulate and solve a Stackelberg game. The retailer sets loan terms that may include a debt seniority requirement. The supplier may either accept the retailer's offer or borrow only from the bank or rely solely on its own capital. A competitively priced bank loan is the supplier's default option. Results: There exist parameter values for which the on-equilibrium loan terms include retailer debt seniority as well as parameter values that do not. In the latter case, the supplier makes the bank the senior lender. The retailer's debt seniority choice depends on the supplier's working capital. When the retailer chooses to be the senior lender, its loan terms may induce the supplier to produce more than the first-best quantity. Managerial implications: Direct financing under equilibrium loan terms weakly improves the expected profits of both the retailer and the supplier. However, it may induce the supplier to produce less than or equal to or greater than the first-best production quantity. Loan limits serve to reduce overproduction.