Long-term Contracts Research Articles

Contract length and buyer satisfaction with the supplier in B2B partnerships: Evidence from an experiment

Prior research has largely ignored the relationship between contract length and buyer satisfaction with the supplier when the supplier cooperates, competes, and coopetes (i.e., cooperates and competes at the same time). To address this gap, we propose one main hypothesis and three moderating hypotheses for cooperation, competition, and coopetition. The main hypothesis investigates whether short-term (vs. long-term) contracts negatively influence buyer satisfaction with the supplier. The cooperation and competition hypotheses separately argue that supplier cooperation and competition positively moderate the relationship between contract length and buyer satisfaction with the supplier, whereas the coopetition hypothesis argues that supplier coopetition negatively moderates the relationship between contract length and buyer satisfaction with the supplier. We test these hypotheses in an experiment with 215 managers with substantial experience in serving as partner or alliance managers in their respective organizations. The findings indicate that short-term (vs. long-term) contracts have a negative effect on buyer satisfaction with the supplier, thereby supporting the main effect. Furthermore, the negative effect of short-term contracts becomes weaker in cases of high levels of supplier cooperation or high levels of supplier competition. Yet, when the level of supplier coopetition increases, the adverse effect of short-term contracts on buyer satisfaction becomes stronger.

Entering Into Contracts: Proceed With Caution Before You Sign

Entering Into Contracts: Proceed With Caution Before You Sign

Efficient Renewable Electricity Support: Designing an Incentive-compatible Support Scheme

Most existing renewables support schemes distort location and dispatch decisions. Many impose unnecessary risk on developers, increasing support costs. Efficient policy sets the right carbon price, supports capacity not output, ensures efficient dispatch and location. The EU bans priority dispatch and requires market-based bidding, but does not address the underlying problem that payment is conditional on generation, amplifying incentives to locate in windy/sunny sites. This article identifies the various distortions and proposes an auctioned contract to address location and dispatch distortions: a financial Contract for Difference (CfD) with hourly contracted volume proportional to local renewable output/MW, with a life specified in MWh/MW, with long-term transmission contracts based on predicted output-weighted actual or simulated nodal prices. This yardstick CfD delivers efficient dispatch. It assures but limits the total subsidy. It does not over-pay for windy/sunny sites. The revenue assurance allows high debt:equity, dramatically lowering the subsidy cost.

Research on optimization of power dispatching under the constraint of deviation electricity

In the medium- and long-term electricity market, uncertain power output, and power load will lead to the deviation between the actual generation and the signed medium- and long-term contract electricity. In order to reduce the system deviation balance cost and ensure the balance of power supply and demand, it is necessary to find a suitable dispatch method. First, a monthly electricity decomposition model of thermal power units is proposed in this paper. After that, we propose a power dispatching model under the constraint of deviated electricity quantity to minimize the cost of electricity deviation. The simulation results of numerical examples show that the proposed dispatching model and method can effectively reduce the monthly contract power deviation and the balance cost.

Revisiting Touch and Concern: The Perils of Degraded Contracts versus the Perils of Opportunism

The touch and concern doctrine addresses a very particular problem: Successors, at best, weakly assent to the land use promises that their predecessors made when they take the property with notice that their predecessors intended to bind them. Thus, there is little reason to presume that the deal we may bind them to would be one that they would strike. Of course, whenever deals persist over time, it is possible that one or the other contracting party would no longer feel that the gains from the deal outweighed its costs, but the problem is more pronounced when the identity of the potentially bound party has shifted, not just the tastes or circumstances of the contracting party. Moreover, initial contractors receive compensation for the risk that tastes or circumstances change, so although there are good paternalistic reasons to protect them against unduly binding long-term contracts, and reasons to give room for long-term flexibility to renegotiate, we need not worry that the initial bound contractor will receive little or no compensation for bearing a burden.
 Those who advocate relying solely on initial contractors to figure out when it is sensible to make their promises run presume that successors will be compensated by paying less for property to account for the burdens of taking on unwanted obligations. This optimistic view is unwarranted: the predecessor’s promises are bundled together with large numbers of land use planning promises and with the purchase of the property. It is unlikely that purchasers will adequately depress bids to account for the disutility of taking on each of the burdens.
 If we looked only at the successors, we would probably just adopt a blanket rule that promises are terminated upon conveyance. But we need to protect the promisees as well: If they have made site-specific, non-fungible investments relying on the promisor and successors meeting the contractual obligations, they are subject to opportunistic exploitation if the contracts simply die upon conveyance. We try to balance these concerns in the first instance by determining whether the deal the predecessor and promisee struck was one that the successor would likely undo rather than redo. Promises that touch and concern the land in this preliminary sense are ones that are location-specific (the benefits to the promisee are particularly high or the costs of compliance for the promisor are atypically low because the promisor occupies a particular parcel). If this is true, the fact that the predecessor and successor are different people, with presumably heterogeneous preferences, may be outweighed by the objective factors that would tend to make their preferences converge: each inhabits a parcel whose features make the contract atypically sensible.
 This preliminary account of the best version of the doctrine is incomplete: It may bind too many successors. A promise may be somewhat location-specific, but distinctions in preferences may swamp the preference-homogenizing effects of locational specificity. It may also bind too few successors. If the promise is location-specific from the promisee’s vantage—benefits from fulfilling the promise are greater because of the promisor’s location—and the promisee made location-specific investments premised on the reasonable belief that successors would be bound, then the successor ought to be bound even though we are by no means confident she would have made the deal she is being asked to observe. But we ought to be alert to the possibility that the promisee indeed has reasonable substitute contracting partners and will not be held up by a uniquely situated parcel owner.
 Each of the proposals I offer to affirm a functional version of touch and concern contradicts the positions taken in the Third Restatement, which, in my view, utterly misunderstands the role the doctrine plays.

Lowering risk intolerance to unlock private investments in renewable energy-based rural electrification

As public resources are scarce, investments from the private sector are essential to scale up rural electrification and thus to achieve universal access to electricity by 2030. However, the lack of clear public policies, together with a high perceived risk, have been a deterrent to investors' participation in off-grid electrification projects. In this paper, we focus on identifying the main drivers of risk, namely the set of uncertainties and perceived risks that prevent private companies from investing in off-grid electrification projects. We use a stochastic discount cash flow technique — net present value (NPV) combined with Monte Carlo simulation — to incorporate these uncertainties and quantify the business and investment risks associated with an off-grid solar PV project. The technique is applied to the case of Colombia, wherein major contributors to risk are the variability in revenues and the annual revenue growth rate. For this case, we estimate the probability of project failure and investigate how private companies could mitigate risks by keeping operating costs to <50 % of revenues. In this regard, the role of the government proves to be essential in providing a better investment environment for private investors. We suggest that government interventions could take the form of financial de-risking instruments, including better-designed end-user subsidies and the implementation of concession agreements through long-term contracts. These results are of interest to private investors who need to account for risk analysis when deciding whether to invest or not in off-grid projects. Also, our findings guide policymakers seeking to understand the private sector perspective while designing efficient policy mechanisms to increase access to electricity in developing countries.

Resilience-Oriented Scheduling of Shared Autonomous Electric Vehicles: A Cooperation Framework for Electrical Distribution Networks and Transportation Sector

As autonomous electric vehicles and car-sharing services are becoming more popular, the contribution of shared autonomous electric vehicles (SAEVs) to the future of urban transportation is getting more achievable. Like conventional electric vehicles, SAEVs can provide power grids with ancillary services. This article proposes a new scheduling scheme for SAEV fleets within a cooperative plan to let power distribution networks benefit from the energy storage of vehicle batteries in recovering critical loads after a predictable extreme event. According to a long-term contract, the detailed request of the distribution system operator (DSO), together with desired constraints and perquisites, is sent to the SAEVs aggregator (SA) prior to the landfall of a predictable extreme event. Afterward, SA runs a targeted algorithm to schedule trip assignments and charging cycles of SAEVs so that the required constraints of DSO are satisfied. The SAEV participants will continue carrying passengers within the scheduled time horizon in addition to delivering energy to the distribution network at the scheduling deadline declared by DSO. This deadline is the time instant when the capacity of the SAEV fleet may be no more applicable to enhance the system preparedness against the approaching event. Numerical results illustrated that the proposed scheme helps improve the power grid resilience by delivering 2396.1 kWh of energy to the distribution network in addition to increasing the total income of each participant SAEV by about 130%. Thus, it is implied that the proposed method offers a win-win situation for both entities.

Mobile electrified plants for decentralized wasted gas valorization: A solution to face the challenges of the new energy era

In view of the current energy crisis, there is a pressing need for cautious management and exploitation of decentralized natural gas. At present, >120 Bm3 are flared upstream. Mobile electrified mini-plants, employing state-of-the-art plasma reactors hold promise for such application. Herein, we demonstrate for the first time the technical and economic feasibility of a mobile and electrified process for offshore conversion of currently wasted natural gas streams into C2 species (olefins). Based on experimental performance data, the process model is developed and optimized with respect to anticipated offshore processing constraints while the process economics, i.e., capital expenditures and total cost are estimated. The process economic feasibility is investigated in the context of a disruptive gas value chain for both the US and European market conditions and different shipping distances. Collectively, the proposed electrified process is a capital-intensive process; a capital investment of 21.8 MUSD is required for the commissioning of a 1-ktonC2/a throughput mini-plant, and the annual equipment depreciation (expressed per ton of product) accounts for 76% of the total production cost (1439 USD/tonC2) when a plant lifetime of 20 years is considered. The electricity cost accounts only for 14% of the total cost. The integration of this mobile electrified process in the conventional gas value chain, i.e., liquefied natural gas (LNG) trading, fosters robustness of the LNG trading business. C2 species instead of LNG could directly be traded and supplied to the customers when the landed LNG prices are well below the breakeven values. As such, the LNG trader could still attain a positive profit margin when the landed prices are below the breakeven point. This hybrid model does offer an effective way to sustain the long-term LNG contracts profitable. The proposed electrified Gas-to-Olefins concept is economically and technically more favorable than Gas-to-Liquids concept and more sustainable than LNG trading for electricity generation.

Electricity Tariff Design: A Survey

In a perfectly competitive market, electricity is priced at the Marginal Cost (MC); MC pricing guarantees economic efficiency (Gunatilake, et al. 2008). In other words, efficient electricity tariffs consider all power supply costs. To a great degree, it also accounts for capital investments for future expansion and up-gradation (Kojima, et al. 2014). In a free market, market forces of demand and supply pushed for MC recovery. In contrast, for a regulated market, the regulator sets the tariff according to the costs and reasonable return determined through the regulatory process. The regulator followed pre-determined guidelines, parameters, and standards set by the government; it may or may not be MC pricing. When a regulated tariff is set at a low level, it distorts the development/ functioning of the market at both the wholesale and retail levels. “If regulated end-user prices are not in line with wholesale market conditions, suppliers without significant low-cost generation capacity or equivalent long-term contracts will not be able to make competitive offers that will allow them to recover their costs. Consequently, with a limited number of suppliers, there will be no development of the wholesale markets. Liquidity will remain at a low level. As a result, neither the wholesale nor retail markets will be competitive” (Cited from Suzzoni, 2009, p. 5).

Mission Accomplished? Balancing Market Growth and Moral Legitimation in the Fair Trade Moral Market

Mission Accomplished? Balancing Market Growth and Moral Legitimation in the Fair Trade Moral Market

Optimization of Feed-in Tariff mechanism for residential and industrial photovoltaic adoption in Hong Kong

Due to the late introduction of Feed-in Tariff (FiT) Scheme to Hong Kong's context, its effectiveness, efficiency, and optimization have merely been investigated yet. Therefore, this study proposes two FiT mechanisms according to the policy characteristics and structure elucidated from existing literatures (i.e., payoff, tariff, and contract structures) (i) Mechanism 1 (i.e., M1): follows the current policy characteristics with a short-term contract structure, which terminates in 2033; and (ii) Mechanism 2 (i.e., M2) introduced a widely adopted policy characteristic with a long-term contract structure, which allows to sell all electricity generated to the power grid. The proposed FiT rate under M1 and M2 guarantees the profitability of the solar photovoltaic (PV) installers with different scales. For residential PV installers (i.e., small-scale PV systems with installed capacity less than10 kW), 6–10 years of discounted payback period (DPB) is considered as the optimization objective. As for industrial PV installers (i.e., large-scale PV systems with installed capacity of 200–1000 kW), 8–12% of internal rate of return (IRR) is considered as the optimization objective. Results indicate that the current FiT rate is slightly high for residential PV installers, and it is recommended to be lowered after 2024 to fit the proposed FiT range, and then levered up in 2028 to ensure the profitability of late participation under M1. Meanwhile, the current FiT rate is found significantly low for industrial PV installers, and it is suggested to be levered up to the proposed FiT range. Furthermore, policy reform is highly recommended altering from M1 to M2 when current policy expires (i.e., 2033). In terms of the techno-economic analysis based on the calculation of levelized profit of electricity (LPOE) where self-consumption of PV system-generated electricity is considered as energy bill savings under M1, the long-term profitability for industrial PV installers under M1 is found to be higher than M2, whereas the opposite is observed for residential PV installers. The contribution of this study is attributed to the flexibility and applicability of the optimized results, the context-specific investigation of the market-independent renewable energy development, and the comprehensive parameters considered in the model development. The results of this study are believed to shed light on policy implications, grid parity, and investment recommendations for the government, utility companies, and PV installers in the long run.

US LNG Boom Puts Producers on Pace To Lap the Competition

The US is poised to retake the crown from Australia as the world’s top LNG exporter, a title the country held briefly in 2022 before Freeport LNG went offline due to a fire in June 2022. Freeport LNG recently began supplying cargoes again and may be up to full speed during the second half of this year. In 2021, the US was third in exports behind Australia and Qatar, which sold about 10.5 Bcf/D and 10.1 Bcf/D of gas as LNG, respectively. According to the US Energy Information Administration (EIA), the US began exporting LNG in February 2016, and within 7 years developed the world’s largest LNG export capacity with seven LNG export facilities totaling 13.9 Bcf/D of peak production capacity. US LNG exports exceeded pipeline exports of natural gas for the first time on an annual basis in 2021. Monthly LNG exports set new records throughout 2021 and averaged 11.3 Bcf/D during that winter, 2.2 Bcf/D more than the previous winter. In March 2022, US LNG exports reached a new high of 11.9 Bcf/D. US exports will be further bolstered by new projects moving forward. According to the US Energy Department (DOE), there are currently five export terminals that have received regulatory approvals and are under construction with another dozen either expansion or greenfield projects that have received regulatory clearances but have yet to break ground. Analysts at Wood Mackenzie see a massive investment opportunity for this next wave of US LNG terminals and predict three new projects with a total capacity of over 34 mtpa could start up as soon as 2024—New Fortress Energy’s Louisiana FLNG, Venture Global’s Plaquemines LNG Phase 1, and ExxonMobil/QatarEnergy’s Golden Pass LNG. Another dozen or so projects could find their way to first cargoes by 2028. If the majority of these projects proceed to final investment decision (FID), the market could see a $100-billion infusion over the next 5 years, with three quarters of that investment coming in pre-FID projects, according to Wood Mackenzie. Planned liquefaction terminals range from additional trains on existing plants to ground-up projects, which even includes a pair of offshore ports utilizing FLNG vessels. While the outlook for the US LNG export market looks strong, inflationary issues are threatening to take the bloom off the rose. The overall cost of these projects is on the rise. According to Wood Mackenzie, Calcasieu Pass LNG, which had its FID made in mid-2019, was expected to cost around $580 per tonne. By March 2022, that number had risen to more than $650 per tonne. Other projects are also experiencing inflationary pressures on planned capex. Despite this, the competitive nature of takeaway contracts has kept those fees lower, even as the cost of the terminals rise. That combination could start to squeeze developer returns. The war in Ukraine has been a major factor contributing to the appetite for US LNG and thus, a key driver in securing long-term contracts for future deliveries. European countries dependent on Russian natural gas have pulled back and are attempting to rein in their dependence while seeking new supplies. While many of the newest supplies will not be available for a couple of years, European counties are expected to push through a period of higher volatility and pricing until fresh US imports start to arrive.

러시아-우크라이나 전쟁 이후 러시아 천연가스 수출 방향의 변화와 전망

The purpose of this study is to analyze the changes in Russia-Europe natural gas relations after Russian invasion of Ukraine in 2022. The following changes are observed after the invasion in 2022.BR Russia’s effort to use its natural gas as a political weapon could not effectively disrupt EU’s untied energy policy. By adopting REPowerEU plan, EU cleary shows its united effort to reduce energy dependence on Russian fossil fuel. Although export volume of Russian LNG to Europe increased in 2022, total export volume of natural gas decreased.BR Asia, especially North East Asia, is the most promising or olny remained alternative natural gas market for Russia considering factor that geographical proximity and its demands. However, China is already importing substantial amount of russian natural gas and it is unclear that China has extra demand for importing additional Russian natural gas. Also, China has shown support for Russia whenever Russia faces difficulties due to conflict with the West, Russia may become dependent to China.BR As for Russia energy policy in Northeast Asian natural gas market, it is desirable for Russia to reduce its dependence on China and increase cooperation with South Korea and Japan which has huge LNG demands. However, considering the fact that South Korea and Japan are also importing natural gas under long-term contracts, that they are under pressure to participate in Western sanctions against Russia, and that the US and Australia are accelerating their entry into the LNG market, Russia’s sales volume in Northeast Asia cannot be increased dramatically. Thus, it is possible to increase its supply, but it seems difficult to enjoy the position as the leading supplier.

Long-term bank lending and the transfer of aggregate risk

Long-term loan contracts transfer aggregate risk from borrowing firms to lending banks. When aggregate shocks increase the future default probability of firms, banks are not compensated for the rising default risk of existing contracts. The flip side is that firms benefit from not facing higher interest rates in recessions. If banks are highly leveraged, this can lead to financial instability with severe repercussions in the real economy. If banks are well capitalized, the risk transfer stabilizes the economy. To study this mechanism quantitatively, we build a macroeconomic model of financial intermediation with long-term defaultable loan contracts and calibrate it to match aggregate firm and bank exposure to business cycle risks in the US. We find that moving from Basel II to Basel III capital regulation eliminates banking crises, increases output in the long run and improves welfare.

SUCH FORMS AND METHODS OF MOTIVATION OF PRACTITIONERS IN THE SPHERE OF YOUR EDUCATION

In the minds of the current development of the practice of the sphere of general education and the strategic resources of the functioning of the foundations of education. Efficient management of specific resources favors the development of mortgages and increases the level of their competitiveness in the field of lighting services. Looking at the main mechanism of stimulation, it is not institutional interests, but the consumption of practitioners, as a destructive force, the development of laying the foundation for higher education. In today’s conscientious minds, the main direct motivational activity is not less than the achievement of high productivity of practice, but the activation of the creative potential of practical workers in the field of higher education. Therefore, it is necessary to appoint such a form and method of stimulation, as to be aware of the effectiveness of the promotion and support new trends in the scientific and lighting process and personnel management. The purpose of the study is research, generalization and development of theoretical and methodological approaches to the development of modern forms and methods of motivating employees in the field of higher education. Modern systems and methods of employee motivation must be combined with established principles to create a system focused on higher education. These systems should include forms and methods of motivation that are compatible with the modern world to encourage workers through short-term international projects. This should increase the number of workers with creative and educated backgrounds who stay in the industry for many years. Increasing creativity and scientific activity of employees will also make higher education systems more competitive and increase their overall quality. A necessary condition for the implementation of material forms of motivation is the availability of financial resources for their provision. The methods of direct material influence include the payment of salaries, as well as additional payments and allowances, to scientific and pedagogical workers in the field of higher education. The use of material methods will contribute to the financial support of employees and the improvement of the socio-economic situation of their families. The use of non-material methods has a psychological effect on the individual, acts as a mechanism for self-realization, scientific and creative development, implementation of developed ideas in scientific, educational and practical activities, which will contribute to the self-realization of employees in a higher educational institution. The functioning of the system of motivation of employees in the field of higher education should be comprehensive, as it combines not only the employment of a highly qualified employee for a vacant position and the signing of a long-term contract with him, but also the provision of conditions for the employee’s work so that he does not have to prematurely terminate the contract. When implementing forms and methods of work motivation, it is important to ensure a systematic process of interaction between management and employees. In addition to the external results of the applied motivation methods, which are manifested in the increase in the number and quality of scientific works, receiving honors, awards, etc., it is important to analyze the attitude of employees to the current system. It is expedient to regularly and periodically survey the employees of a higher educational institution regarding the positive and negative features of the motivation system and suggestions for its improvement. To operate effectively, higher education institutions need employees with a wide range of skills. Ensuring that these employees receive the proper care and attention from their supervisors is vital to the success of the institution. The success of these schools motivates staff to develop new ideas and improve higher education services. This creates a competitive advantage for these schools over other educational institutions. Now, motivational activity occupies a central place in our society. They activate the use of creative potential of employees and increase labor productivity. They must be defined and implemented in such a way as to meet the latest trends in higher education and personnel management..

Resilient relief supply planning using an integrated procurement-warehousing model under supply disruption

In order to mitigate the damage caused by natural disasters, appropriate relief supply planning is essential for humanitarian relief chains. This paper develops a resilient relief supply plan by formulating a novel integrated procurement-warehousing model under supply disruption via utilizing a portfolio of long-term contracts between a relief organization, multiple main and backup suppliers, and a third party who provides warehousing service. By using a portfolio of supply sources, a tailored two-stage scenario-based stochastic programming model is presented for determining an integrated relief procurement-warehousing plan. The plan includes (1) a number of multi-period quantity flexibility contracts with the main suppliers at pre-disaster, for prepositioning of relief supplies while ensuring to receive extra required amounts at post-disaster, (2) a number of dynamic option contracts with backup suppliers for decreasing the impacts of risks pertaining to the demand uncertainty and supply disruption at the main suppliers, and (3) a multi-period warehousing contract with a third party which allows the relief organization to adjust the required storage space in different periods to avoid extra cost pertaining to the storage space surplus/shortage. An effective differential evolution (DE) solution algorithm is also devised to solve the real scale instances efficiently. Applicability of the proposed model is illustrated by a real case study and useful managerial insights are extracted through conducting several sensitivity analyses.

An Assessment Of The Strategies For Mitigating Pharmaceutical Supply Chain Disruption During COVID-19 At The Central Medical Stores Namibia

The COVID-19 pandemic has negatively impacted Namibia&amp;s public sector pharmaceutical supply chain. This study aimed to investigate the strategies for mitigating pharmaceutical supply chain disruption during COVID-19 using Central Medical Stores Namibia as a case study. The study employed a case study design to explore the research area intensively. Unstructured interviews were conducted with seven pharmacists from Central Medical Stores who were purposively selected. Data were analyzed using thematic analysis with the aid of ATLAS.ti software. Seven (7) pharmacists working at Central Medical Stores were included in this study. The participants highlighted various thematic issues reflecting the impact of COVID-19 on medicines procurement, access and distribution within the healthcare system. These themes included managing the supply chain during the COVID-19 pandemic; COVID-19 pandemic-induced supply chain challenges; Approaching supply chain challenges; medicines shortages; and looking into the future. The study found that there needs to be government intervention to encourage local manufacturing, international intervention to prevent the hoarding of pharmaceuticals by rich nations, adoption of long-term procurement contracts, establishing of good communication with suppliers, having a sufficient budget for pharmaceuticals, training employees in supply chain management and adequate storage space in order to mitigate pharmaceutical supply chain challenges at the Central Medical Stores during COVID-19.

An Assessment Of The Strategies For Mitigating Pharmaceutical Supply Chain Disruption During COVID-19 At The Central Medical Stores Namibia

The COVID-19 pandemic has negatively impacted Namibia&amp;s public sector pharmaceutical supply chain. This study aimed to investigate the strategies for mitigating pharmaceutical supply chain disruption during COVID-19 using Central Medical Stores Namibia as a case study. The study employed a case study design to explore the research area intensively. Unstructured interviews were conducted with seven pharmacists from Central Medical Stores who were purposively selected. Data were analyzed using thematic analysis with the aid of ATLAS.ti software. Seven (7) pharmacists working at Central Medical Stores were included in this study. The participants highlighted various thematic issues reflecting the impact of COVID-19 on medicines procurement, access and distribution within the healthcare system. These themes included managing the supply chain during the COVID-19 pandemic; COVID-19 pandemic-induced supply chain challenges; Approaching supply chain challenges; medicines shortages; and looking into the future. The study found that there needs to be government intervention to encourage local manufacturing, international intervention to prevent the hoarding of pharmaceuticals by rich nations, adoption of long-term procurement contracts, establishing of good communication with suppliers, having a sufficient budget for pharmaceuticals, training employees in supply chain management and adequate storage space in order to mitigate pharmaceutical supply chain challenges at the Central Medical Stores during COVID-19.

Multi-echelon supply chain coordination: Contract sequence and cut-off policies

The influence of contract sequence and interaction between different contract mechanisms on profit allocation among supply chain agents and cutoff policies of a multi-echelon supply chain have received scarce consideration in the literature. In this study, we try to fill this gap and examine a serial decentralized three-echelon supply chain using a dynamic game of incomplete information where the supplier and the manufacturer can choose either a short-term contract or a long-term contract. Using two sequential bilateral monopoly settings we analyze four scenarios of contract sequence for calculating the payoffs of supply chain agents. Based on these payoffs, we calculate the Bayesian Nash equilibrium of the game. This study shows the importance of contract sequence in profit allocation among different stakeholders of a decentralized multi-echelon supply chain. We further demonstrate that the upstream agent does not necessarily hold higher bargaining power among all the agents. Our key findings are as follows: first, optimal profit levels, as well as cutoff policies, are influenced by marginal costs and reservation profits of supply chain agents along with contract sequence; second, supply chain coordination is dependent on contract sequence; third, supply chain agents do not naturally choose channel coordinating contract sequence; fourth, the supplier needs to devise incentive scheme for the manufacturer to coordinate the overall supply chain; fifth a myopic supplier prefers short-term agreement and a foresighted supplier prefers long-term agreement.

Replacing gas boilers with heat pumps is the fastest way to cut German gas consumption

The supply security of fossil gas has been disrupted by the Russo-Ukrainian War. Decisions to relocate the production and transport of gas have become so urgent that new long-term contracts are imminent that undermine the Paris Climate Agreement. Here, we simulate how quickly the addition of renewable electricity and the installation of heat pumps can substitute enough gas to reduce supply risk, while taking a decisive step towards meeting the Paris Agreement. Our bottom-up modelling, using Germany as an example, shows technical pathways on how installing heat pumps is one of the fastest ways to reduce gas consumption, in addition to reducing the load hours of gas-fired power plants. With targeted efforts, maximally 60% of gas from the Russian Federation can be substituted by 2025 with heat pumps and grid expansions, and enough electricity will remain available that the phase-out of coal and the entry into e-mobility will still be practicable.