A principal-agent model on reverse supply chain under asymmetric collection cost information

In this paper, we develop a supply chain model to study the contract design problem for a remanufacturer who delegates the collection of used products to a collector and the collectorpsilas cost is a private information which is opaque to the remanufacturer. We apply the incentive theory to this model and characterize the optimal contract. We find that the contracts are quite different with different values of two system parameters: the probability that the collector is of high efficiency and the salvage value of the end-of-life product not to be remanufactured. The information rent and the value of cost information for the remanufacturer are also studied in different cases and managerial insights are explored.