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Information leakage and supply chain contracts

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  • Liu, Hao
  • Jiang, Wei
  • Feng, Gengzhong
  • Chin, Kwai-Sang

Abstract

This paper investigates information leakage under different contract configurations in a supply chain. We consider two competing retailers, one of whom (incumbent) has private information about market demand while the other (entrant) has no access to acquire any market demand information. We assume that the supplier is the leader who may choose a wholesale price contract (WPC) or a revenue-sharing contract (RSC) with each retailer independently. We explore the effect of the supplier's and incumbent's incentives on non-leakage equilibrium and find out that there exists a non-leakage equilibrium only when the incumbent signs an RSC with the supplier under an appropriately given revenue-sharing rate in situations of high demand variation.

Suggested Citation

  • Liu, Hao & Jiang, Wei & Feng, Gengzhong & Chin, Kwai-Sang, 2020. "Information leakage and supply chain contracts," Omega, Elsevier, vol. 90(C).
    • Handle: RePEc:eee:jomega:v:90:y:2020:i:c:s030504831730659x
    DOI: 10.1016/j.omega.2018.11.003
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    8. Xia, Jing & Niu, Wenju, 2021. "Carbon-reducing contract design for a supply chain with environmental responsibility under asymmetric information," Omega, Elsevier, vol. 102(C).

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