Paying for Teamwork: Supplier Coordination with Endogenously Selected Groups

• 成果类型: Article
• 署名作者: Fan, James; Kwasnica, Anthony M.; Thomas, Douglas J.
• 署名单位: Johns Hopkins University; Pennsylvania Commonwealth System of Higher Education (PCSHE); Pennsylvania State University; Pennsylvania State University - University Park; University of Virginia
• 刊物名称: PRODUCTION AND OPERATIONS MANAGEMENT
• ISSN/ISSBN: 1059-1478
• DOI: 10.1111/poms.12856
• 发表日期: 2018
• 页码: 1089-1101
• 关键词: weakest-link games; strategic uncertainty; efficient coordination; FAILURE; COMMUNICATION; equilibrium; INFORMATION; demand; chains

摘要

We experimentally investigate horizontal coordination between suppliers where group output is limited by the lowest-performing member and groups are formed endogenously. All participants first choose between one of two groups, where one group has an entry fee. Participants then simultaneously make capacity choices, and the minimum choice within each group dictates profits for group members. Allowing participants to select their group, thereby indirectly determining the group size, has strong implications for equilibrium outcomes. We find both theoretically and experimentally that the group with an entry fee always achieves higher output, while members of both groups earn equal profits in equilibrium. From a managerial perspective, costly membership fees for exclusive groups can separate high-performing and low-performing subjects when group selection is endogenous, even when the costly fee provides no other benefits. Interestingly, the group with an entry fee always has fewer subjects, suggesting that a group membership fee acts as a deterrent to poor-performing subjects.