The precaution for moral hazard in supply chain

Abstract

The moral hazard in supply chain not only increase the management cost, but also enhance the inside consume, finally decrease the integrative competition ability. As a result, prevent and avoid the moral hazard of the supply chain is an important research aspect. Through revealing the deep incentives of moral hazard in supply chain, and determining reasonable precautions could make the moral hazard of supply chain in a safe range, to ensure the normal operation of the supply chain. From the internal system in supply chain to the external system, analyze the incentives of supply chain, based on the Tirole model, and build a dynamic alliance incomplete-information game model in the frame of principle-agent theory to prevent moral hazard in supply chain. The conclusion is drawn that moral hazard can be prevented through designing a kind of distribution policy by the third-party system.