Analysis of supply chain principal-agent incentive contract

To a large extent, the effort coefficient of retailer determines the market demand in supply chain. Neverthelessbecause of asymmetric information, suppliers can not observe the real behaviors of retailer. Furthermore, it influences the expected returns of supplier and the balance of supply chain. Using the principal-agency theory of Information Economics and comparing the linear contract under asymmetric information and symmetric information, this article has made a further research on the impact on the establishment of incentive contract mechanism of two-layer supply chain (including one supplier and one retailer), analyzing the parameters such as external uncertainty 's effect on the reward rate, the effort coefficient, fixed income, the expected income of the supplies, the real income of retailer and the agency cost.