Research on Supplier Equity Incentives Retailer's Supply Chain Model

• 1、School of Economy and Business Administration, Chongqing University, Chongqing 400030, China

Abstract：Equity incentives are always applied to the internal management of the company, and incentives can alleviate the principal-agent problems. Suppliers often cannot be smooth sailing in the development of new markets. Thus, some suppliers adopt equity to incentive their downstream retailers. This paper characterizes the supplier-retailer's equity incentive model in a two-level supply chain. The study finds that the supplier-retailer equity incentive is a drink-thirst-quencher. Although retailers will try their best to develop the market, the supplier's profits will be reduced. Equity incentive needs coordination with the supply chain coordination contract and introduce "profit sharing contract". Finally, the retailer will distribute part of the sales profit to the supplier and achieve a win-win situation.

Keywords： Logistics and supply chain Equity Incentive Supplier Supply Chain "Profit Sharing Contract"