We apply variance analysis for studying the risk-sharing mechanism in distribution channels, in which the risk-averse buyer and supplier are suffered from commodity price shocks. We obtain the closed-form optimal pass-through rate that minimizes the total channel risk and maximizes the channel...

This paper studies a multi-stage dynamic pricing model, in which a state variable evolves as a stochastic process and affects customer demand at each stage. A firm has a limited amount of assets to sell and sets the price at each stage after observing the state variable. We find that besides the...