The Study Of Principal-Agent Theory In Distribution System With Multi-Players

In modern economic activities, product diversification and market competition increased and enhanced. Some manufacturers may entrusted their products to many retailers.Meanwhile, retailer may sign the appointed agency agreement with many manufacturers to sell many commodities. So that a number of participants appear in such a situation which leads to the competition and interactive principal agent. At this point, the previous studies about single entruster and single agen can not satisfy the practical needs any more.This study adopts principal-agent theory, setting out from the number of participants in the game. First, two special situations of "Operated Stores" and "Private Brand Product" are considered in single principal-agent problem in which case effort cost (output) coefficient as well as the effect of the degree of risk-aversion on the equilibrium are discussed. Information value analysis are also conducted in this article. Furthermore, parallel multi principal-agent problem is studied. Models are set up under the conditions of symmetric and asymmetric information according to the analysis and the practise, followting the equilibrium analysis and information value analysis. Finally, the study is extended to solve the problem of interactive multi principal-agent.As it reffers to the particular principal-agent problem that existing in the "Operated Stores" and "Private Brand Product", we can figure out that under the conditions of asymmetric information, effort made by the manufacturer on operating the Operated Stores is absolutely more than that by agents on selling the agented products. At the same time, effort made by agent on the sales of their own private brand product is absolutely more than that of the agented products.In order to avoid the agents being too"lazy", manufacturers should provide reasonable high saliries and bonuses to incentive the agents to work hard. Besides, manufacturers are suggested to organize corresponding activities actively and initiatively.In the problem of parallel and interactive multi principal-multi agent, studies show that, in legitimate competition, the manufacturer's profit increases with the increase of output and level of competitionSo that we recommend that manufacturers should provide a platform for excellent agents to incentive their creativity and make full use of retailers'competition, promoting the products appropriatedy and opportunely. The smaller the agents'degree of risk aversion is, the greater that of other manufacturers'agents is and more benefits are obtained by the manufacturers. So that manufacturers should give a higher rewards to the innovative and challenging agents to incentive them to work harder.