Which of the following is NOT a drawback of a revenue-sharing contract?
A)The supplier carries a greater burden of the risk.
B)The supplier may not be motivated to expand its capacity for fear of ending up with excess capacity if demand remains weak.
C)The supplier has the administrative burden of monitoring the manufacturer's sales and revenues to be sure the firm isn't underreporting them.
D)The burden of overcapacity is borne by the buyer.

Question

Quizplus · Accepted Answer

The burden of overcapacity is not a drawback of a revenue-sharing contract, as this risk is typically borne by the supplier. The other options listed are all potential drawbacks of revenue-sharing contracts.

Which of the Following Is NOT a Drawback of a Revenue-Sharing