Contract manufacturing is the catalyst shaping the world economy under globalization. Affirming the dominance of the open network in organizing worldwide value chains, it transformed Japan and US into trade partners rather than rivals. It allows firms like Apple, Nokia and Sony to outsource...

Amanufacturer writes supply contracts with N buyers. Then, the buyers invest in innovation, and the manufacturer builds capacity. Finally, demand is realized, and the firms renegotiate the supply contracts to achieve an efficient allocation of capacity among the buyers. The court remedy for...

In a stylized model of biopharmaceutical contract manufacturing, this paper shows how the potential for renegotiation influences the optimal structure of supply contracts, investments in innovation and capacity, the way scarce capacity is allocated, and firms' resulting profits. Two buyers...