KCG Lunch-Time Seminar on Vertical Contracts in a Supply Chain and the Bullwhip Effect

In the time of the COVID-19 pandemic, KCG would like to continuously encourage knowledge exchange and discussions on research on globalization and on global value chains by using digital means. Prof. Horst Raff, Ph.D. (Kiel University & KCG) will give our first Digital Lunch-Time Seminar titled “Vertical Contracts in a Supply Chain and the Bullwhip Effect: Model, Extensions and Possible Applications to Trade” on April 24, 2020 (12:00-13:00, CET).

Abstract: This paper shows that decentralized supply chains, in which upstream firms use linear wholesale prices, may experience lower upstream production and downstream sales volatility than vertically integrated supply chains, and may be less susceptible to the bullwhip effect where the variance of upstream production exceeds the variance of downstream sales. The reason is that decentralized supply chains exhibit a price effect, whereby upstream producers raise wholesale prices in the case of positive demand shocks and lower wholesale prices in the case of negative demand shocks. Whereas upstream producers benefit from the price effect and thus from a dampening of the bullwhip effect, downstream firms may lose and overall supply chain profit may decrease.

If you are interested in joining us, please send an email to kcg-conference@ifw-kiel.de to receive a Gotomeeting-Link to the seminar.