Information Sharing in a Supply Chain with a Common Retailer

Weixin Shang (), Albert Y. Ha () and Shilu Tong ()
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Weixin Shang: Department of Computing and Decision Sciences, Lingnan University, Tuen Mun, Hong Kong
Albert Y. Ha: School of Business and Management, Hong Kong University of Science and Technology, Clear Water Bay, Kowloon, Hong Kong
Shilu Tong: School of Management and Economics, CUHK Business School, The Chinese University of Hong Kong, Shenzhen, China

Management Science, 2016, vol. 62, issue 1, 245-263

Abstract: We study the problem of information sharing in a supply chain with two competing manufacturers selling substitutable products through a common retailer. Our analysis shows that the retailer’s incentive to share information strongly depends on nonlinear production cost, competition intensity, and whether the retailer can offer a contract to charge a payment for the information. Without information contracting, the retailer has an incentive to share information for free when production economy is large but has no incentive to do so when there is production diseconomy. With information contracting, the retailer has an incentive to share information when either production diseconomy/economy is large or competition is intense. We characterize the conditions under which the retailer shares information with none, one, or both of the manufacturers. We also show that the retailer prefers to sell information sequentially rather than concurrently to the manufacturers, whereas the manufacturers’ preferences are reversed. This paper was accepted by Yossi Aviv, operations management.

Keywords: supply chain management; common retailer; incentive; information sharing; nonlinear production cost; manufacturer competition (search for similar items in EconPapers)
Date: 2016
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Citations: View citations in EconPapers (83)

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