International Journal of Economics and Management Engineering                                                                                   
International Journal of Economics and Management Engineering(IJEME)
ISSN:2225-742X(Print)       ISSN:2226-7344(Online)
Editor-in-Chief: Prof. Jeffrey E. Jarrett (USA)
Incentive Contract Between FPLs and TPLs Considering Unfairness Aversion in Agricultural Product Financing
Full Paper(PDF, 213KB)
Agricultural products financing broadens the application range of inventory financing, but agricultural products financing relies on a high level of logistics service providers, which is called the fourth-party logistics(FPLs) because of agricultural products’ slow deterioration, difficulty for transport and storage etc. FPLs will subcontract logistics tasks to the third-party logistics (TPLs) after they accept the tasks from banks. TPLs’ effort will influences FPLs’ profits, as well as the relationship between FPLs and banks. Thus it is significant to make TPLs put more effort into the operation. This paper introduces FPLs into model of the business and uses principal-agency theory to investigate incentive contracts between a FPL and a TPL. Here, we establish a multi-task principal-agent model, and considers situations with TPLs’ unfairness aversion. Results show that TPLs with unfairness aversion will exert extra effort when TPLs provide a higher reward. The stronger the sense of the TPLs’ fairness aversion is, the more the TPLs will increase extra effort, thus, FPLs gain more profits compared with that in traditional principal-agent mode.
Keywords:Agricultural Product Financing; Third-party Logistics (TPLs); Fourth-party Logistics (FPLs); Incentive Contract
Author: XU Peng1
1.College of Management, Southwest University of Political Science and Law, Chongqing 401120, China
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