{"status":"ok","message-type":"work","message-version":"1.0.0","message":{"indexed":{"date-parts":[[2025,10,27]],"date-time":"2025-10-27T10:54:07Z","timestamp":1761562447336,"version":"3.41.2"},"reference-count":48,"publisher":"Emerald","issue":"5","license":[{"start":{"date-parts":[[2019,5,7]],"date-time":"2019-05-07T00:00:00Z","timestamp":1557187200000},"content-version":"tdm","delay-in-days":0,"URL":"https:\/\/www.emerald.com\/insight\/site-policies"}],"content-domain":{"domain":[],"crossmark-restriction":false},"short-container-title":["K"],"published-print":{"date-parts":[[2019,5,7]]},"abstract":"<jats:sec>\n<jats:title content-type=\"abstract-subheading\">Purpose<\/jats:title>\n<jats:p>A lack of visibility into the manufacturer\u2019s production cost information impedes a retailer\u2019s ability to maximize her own profits, especially when market demand is uncertain. The purpose of this paper is to investigate the use of an option contract within a one-period two-echelon supply chain in the presence of asymmetric cost information.<\/jats:p>\n<\/jats:sec>\n<jats:sec>\n<jats:title content-type=\"abstract-subheading\">Design\/methodology\/approach<\/jats:title>\n<jats:p>Based on the principal-agent model, the retailer, acting as a Stackelberg leader, offers a menu of option contracts to mitigate the risk of uncertain demand and reveal asymmetric production cost information. The optimal contract in asymmetric and symmetric information scenarios is derived. Finally, the impact of production costs on the optimal contracts and the actors\u2019 profits is explored by numerical experiments.<\/jats:p>\n<\/jats:sec>\n<jats:sec>\n<jats:title content-type=\"abstract-subheading\">Findings<\/jats:title>\n<jats:p>By comparing the optimal equilibrium solutions in two scenarios, the authors show that asymmetric cost information has a large impact on the optimal option contract and profits. In addition, information rent is affected by the type differential. The results prove that the level of information asymmetry plays a vital role in option contracts and profits.<\/jats:p>\n<\/jats:sec>\n<jats:sec>\n<jats:title content-type=\"abstract-subheading\">Originality\/value<\/jats:title>\n<jats:p>Different from the existing literature on private demand information, this paper considers a supply chain with asymmetric cost information in the context of option contracts. Interestingly, not only the production cost but also the probability of a low production cost can affect the option strike price. In addition, from the perspective of the manufacturer, a high cost does not always bring a high information rent. These findings can provide some guidance to decision-makers.<\/jats:p>\n<\/jats:sec>","DOI":"10.1108\/k-12-2017-0495","type":"journal-article","created":{"date-parts":[[2018,12,4]],"date-time":"2018-12-04T03:46:32Z","timestamp":1543895192000},"page":"835-860","source":"Crossref","is-referenced-by-count":8,"title":["Option contract design for supply chains under asymmetric cost information"],"prefix":"10.1108","volume":"48","author":[{"given":"Xue","family":"Chen","sequence":"first","affiliation":[]},{"given":"Bo","family":"Li","sequence":"additional","affiliation":[]},{"given":"Simin","family":"An","sequence":"additional","affiliation":[]}],"member":"140","reference":[{"issue":"3","key":"key2020092314273861000_ref001","doi-asserted-by":"crossref","first-page":"909","DOI":"10.1016\/j.ejor.2014.02.002","article-title":"Developing real option game models","volume":"237","year":"2014","journal-title":"European Journal of Operational Research"},{"issue":"3","key":"key2020092314273861000_ref002","doi-asserted-by":"crossref","first-page":"171","DOI":"10.1287\/msom.4.3.171.7754","article-title":"Coordination and flexibility in supply contracts with options","volume":"4","year":"2002","journal-title":"Manufacturing & Service Operations Management"},{"key":"key2020092314273861000_ref003","unstructured":"Bolandifar, E., Feng, T. and Zhang, F. 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