Demand Effect and Incentive Problem of Retail

This paper gives a result that the incentive effect is related to the elasticity of demand.When a contract is based on the sale, the absolute risk avoidable degree is not the only decisive factor for incentive effect. The model's policy meaning is that the sellers with higher absolute risk avoidable degree should be charged with the sale task in areas with a higher elasticity of demand, and some competition mechanism should be drawn into the marketing management.