Coordination and Incentive Mechanisms on Collaborative Investment in the Supply Chain

This paper examines coordination problems and corresponding incentive mechanisms between a retailer and a third-party Logistics for jointly investing in an information technology that has the potential to improve the efficiency and security of the supply chain. The conclusion indicates that internal incentive mechanisms, such as investment cost sharing among supply chain partners, are not likely to resolve underinvestment problems completely; Instead, external financial incentive mechanisms, such as tax incentives, need to be considered to coordinate the supply chain