講座：The Bright Side of Price Volatility in Global Commodity Procurement
題 目：The Bright Side of Price Volatility in Global Commodity Procurement
演講人：劉黎明 教授 Lingnan University
主持人：李成璋 助理教授 上海交通大學安泰經濟與管理學院
地 點：上海交通大學徐匯校區 安泰樓A305室
We study two competing firms’ contract selection decisions between the fixed price contract (FPC) and index-based contract (BIC) for offshore commodity procurement. The contract price under an IBC is contingent on a publicly recognized index price, which correlates with the demand of the commodity. This correlation allows firms to have, prior to procurement quantity decisions, updated believe on both the demand and index price from demand forecast. The use of IBC and two-dimensional information updating create a unique response effect in the Bayesian Nash equilibrium of the Cournot sub-game. Contrary to conventional wisdom, we find that, with the response effect, the increase of price volatility can be beneficial to firms, and furthermore, a firm may benefit from its rival’s forecast accuracy improvement when differentiated contracts are chosen. We further show that when the expected procurement costs under the FPC and IBC are equal, the increase in price volatility renders the IBC more attractive as it helps dampen competition and exerts the beneficial response effect. When the FPC offers a cost advantage, both firms chose it for cost efficiency if the market size is relatively large or price volatility is relatively low; otherwise, the IBC become more favorable when the market size shrinks. This study takes one step forward in revealing the bright side of price volatility and understanding the effect of information updating from one dimension to two dimensions.
LIU Liming is a chair professor in the Faculty of Business, Lingnan University in Hong Kong. Prior to his current position, he was with the Faculty of Business, Hong Kong Polytechnic University from 2006 to 2011, and with the Department of Industrial Engineering and Logistics Management, Hong Kong University of Science and Technology from 1993 to 2006. His research areas include supply chain management, inventory theory, healthcare management, empirical research in OM-Accounting/Finance interface, and queueing systems. His works appear in Queueing Systems, EJOR, Management Science, Operations Research, MSOM, POMS, TRB, TRE, IIE Transactions, JAP, and NRL.