Manufacturers who outsource components incur risks as well as benefits. If the supplied product has a major quality defect, the adverse effect on the manufacturer's reputation reduces its market share. This paper presents a discrete-time model of a buyer who collaborates with a sole supplier to...

The reputation of a multinational firm (a “buyer”) is hurt if its offshore supplier flagrantly violates fair labor practices. How should a buyer manage the consequent risk of reduced sales? This paper analyzes a dynamic Stackelberg game in which the buyer (the “leader”) offers financial...