Study on Procurement Contract Design of Emergency Medical Supplies

Abstract

Abstract: COVID-19 outbreak has highlighted the importance of production capacity reserve in response to major public health emergencies. Considering characteristics of the production of emergency medical supplies, this paper studies how to guide a manufacturer to truly report its productivity which is its private information and to act as a buyer expects through contract design. First, without considering information asymmetry, the wholesale price contract is designed. Then, taking information asymmetry into account, the menu contract is designed based on the screening model. Further, the two-part tariff contract is proposed to adapt to the situation where the manufacturer's production input is non-contractible. Finally, the contracts are compared and analyzed numerically. This paper provides a decision-making basis and management insights for pricing production capacity reserve and optimizing emergency response for major public health emergencies.

Key words: emergency response, medical supplies, information asymmetry, contract design

Lin Qi, Zhao Qiuhong, Yan Yingchen. Study on Procurement Contract Design of Emergency Medical Supplies[J]. Management Review, 2021, 33(8): 302-313.

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