Abstract: Physical reserves with the shortest response time plays an important role in emergency situation to meet the urgent and huge demand, especially when sudden-onset disasters happen. As the entity who takes the responsibility of dealing with emergencies, the government must ensure abundant supplies are reserved in advance. Cooperation with supplier is necessary for the government to expand the holding capacity and to reduce costs.
Contracts are widely used in commercial supply chain, but less popular in humanitarian supply chain because of the uncertain demands and complex situations. The contract form and factors to consider should adapt to unique characteristics of emergency situations. On one hand, when disasters happen, the market prices of necessary products are likely to increase. A moderately increased price is reasonable because of the high demand and rising costs. A recently published consultation paper also illustrates the legitimacy of slightly increased market prices. Therefore, for the purchased supplies under emergency situations,the rising market price should be considered to protect the supplier's profit and firm the government-supplier cooperation. Meanwhile, considering the uncertainty of demand quantity, subsidizing the contracted but unpurchased supplies is also necessary to cover the supplier's costs of production, holding, et al.
In a contract, participants' goals and interests tend to be different, and then a game will exist. Since the emergency procurement is a buyer-led market, a government-led Stackelberg game is established in this paper. Considering the unique characteristics of emergency situation, a price flexibility contract is constructed, which consists of a basic payment, a price difference subsidy and a subsidy for unpurchased supplies. Through deduction and numerical calculation, it is proved and confirmed that the supply chain is coordinated under the price flexibility contract. Profits (saving costs) can be distributed between the government and the supplier by adjusting the basic payment. Besides, at a basic payment level, arbitrary combination of the price difference subsidy and unpurchased supplies subsidy increases the flexibility of contract's implementation.
In this research, the abrupt market price's influence on participants' decisions is emphasized and proved by introducing price difference subsidy, and also its importance to the contract's feasibility and flexibility is demonstrated. In general, contributions are made to the literature on emergency supplies procurement management and contract theory, and assistace for the government is provided to decide how to cooperate with suppliers in reality for emergency purpose.

Key words: emergency supplies procurement, flexible contract, pricing model, game analysis