Abstract: In this paper,we investigate the pricing decision and the compensation strategy of a manufactur er with heterogeneous sales force.The manufacturer hires the sales-agent to sell multi2products.The sales-agent usually has better information of his selling ability than the manufacturer does and he will dis tribute his efforts according to the products.compensation contracts,while the selling ability and effort distribution will both influence the demand.As there is asymmetric information before the manufacturer offers the contracts,the manufacturer has to pay extra cost to get the sales-agent's private information a bout selling ability.And by applying principle-agent theory,we find that the manufacturer can control the agent's effort distribution through setting the optimal prices.

Key words: selling ability, asymmetric information, compensation contracts: pricing