The two-term multi-task supply chain principal-agent analysis

In the supply chain, the supplier offers the retailer products for sales. The retailer affects the sales outcome by his effort. The supplier wants to inspire the retailer´s more effort for the long-term sales goal. However, due to the asymmetric information, the supplier can´t observe the retailer´s effort and the moral hazard will come into being, which leads to system inefficiencies. To deal with this problem, based on the principal-agent theory, we construct the dynamic multi-task supply chain principal-agent model, by which we analyze the impact of the information asymmetry to the supply chain contract. Furthermore by comparing the contracts between the single-term multi-task and two-term multi-task, we have analyzed their different effect on the commission rate. It shows that the dynamic principal-agent contract is helpful to for improving supply chain performance.