IDEAS home Printed from https://ideas.repec.org/a/eee/jomega/v90y2020ics030504831730659x.html
   My bibliography  Save this article

Information leakage and supply chain contracts

Author

Listed:
  • 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
    as

    Download full text from publisher

    File URL: http://www.sciencedirect.com/science/article/pii/S030504831730659X
    Download Restriction: Full text for ScienceDirect subscribers only
    File URL: https://libkey.io/10.1016/j.omega.2018.11.003?utm_source=ideas
    LibKey link: if access is restricted and if your library uses this service, LibKey will redirect you to where you can use your library subscription to access this item
    ---><---

    As the access to this document is restricted, you may want to search for a different version of it.

    References listed on IDEAS

    as
    1. Liang Guo & Tian Li & Hongtao Zhang, 2014. "Strategic Information Sharing in Competing Channels," Production and Operations Management, Production and Operations Management Society, vol. 23(10), pages 1719-1731, October.
    2. Gérard P. Cachon & Martin A. Lariviere, 2001. "Contracting to Assure Supply: How to Share Demand Forecasts in a Supply Chain," Management Science, INFORMS, vol. 47(5), pages 629-646, May.
    3. Lode Li & Hongtao Zhang, 2008. "Confidentiality and Information Sharing in Supply Chain Coordination," Management Science, INFORMS, vol. 54(8), pages 1467-1481, August.
    4. Hau L. Lee & Kut C. So & Christopher S. Tang, 2000. "The Value of Information Sharing in a Two-Level Supply Chain," Management Science, INFORMS, vol. 46(5), pages 626-643, May.
    5. Özalp Özer & Wei Wei, 2006. "Strategic Commitments for an Optimal Capacity Decision Under Asymmetric Forecast Information," Management Science, INFORMS, vol. 52(8), pages 1238-1257, August.
    6. Zhang, Juliang & Chen, Jian, 2013. "Coordination of information sharing in a supply chain," International Journal of Production Economics, Elsevier, vol. 143(1), pages 178-187.
    7. Yao, Z. & Leung, Stephen C.H. & Lai, K.K., 2008. "Manufacturer's revenue-sharing contract and retail competition," European Journal of Operational Research, Elsevier, vol. 186(2), pages 637-651, April.
    8. In-Koo Cho & David M. Kreps, 1987. "Signaling Games and Stable Equilibria," The Quarterly Journal of Economics, President and Fellows of Harvard College, vol. 102(2), pages 179-221.
    9. Guangwen Kong & Sampath Rajagopalan & Hao Zhang, 2013. "Revenue Sharing and Information Leakage in a Supply Chain," Management Science, INFORMS, vol. 59(3), pages 556-572, November.
    10. Lode Li, 2002. "Information Sharing in a Supply Chain with Horizontal Competition," Management Science, INFORMS, vol. 48(9), pages 1196-1212, September.
    11. Li, Xiuhui & Wang, Qinan, 2007. "Coordination mechanisms of supply chain systems," European Journal of Operational Research, Elsevier, vol. 179(1), pages 1-16, May.
    12. Pan, Kewen & Lai, K.K. & Leung, Stephen C.H. & Xiao, Di, 2010. "Revenue-sharing versus wholesale price mechanisms under different channel power structures," European Journal of Operational Research, Elsevier, vol. 203(2), pages 532-538, June.
    13. Ali, Mohammad M. & Babai, Mohamed Zied & Boylan, John E. & Syntetos, A.A., 2017. "Supply chain forecasting when information is not shared," European Journal of Operational Research, Elsevier, vol. 260(3), pages 984-994.
    14. Krishnan S. Anand & Manu Goyal, 2009. "Strategic Information Management Under Leakage in a Supply Chain," Management Science, INFORMS, vol. 55(3), pages 438-452, March.
    15. Albert Y. Ha & Shilu Tong & Hongtao Zhang, 2011. "Sharing Demand Information in Competing Supply Chains with Production Diseconomies," Management Science, INFORMS, vol. 57(3), pages 566-581, March.
    16. Sechan Oh & Özalp Özer, 2013. "Mechanism Design for Capacity Planning Under Dynamic Evolutions of Asymmetric Demand Forecasts," Management Science, INFORMS, vol. 59(4), pages 987-1007, April.
    17. Zhang, Wei-Guo & Fu, Junhui & Li, Hongyi & Xu, Weijun, 2012. "Coordination of supply chain with a revenue-sharing contract under demand disruptions when retailers compete," International Journal of Production Economics, Elsevier, vol. 138(1), pages 68-75.
    18. Yue, Xiaohang & Raghunathan, Srinivasan, 2007. "The impacts of the full returns policy on a supply chain with information asymmetry," European Journal of Operational Research, Elsevier, vol. 180(2), pages 630-647, July.
    19. Gérard P. Cachon & Martin A. Lariviere, 2005. "Supply Chain Coordination with Revenue-Sharing Contracts: Strengths and Limitations," Management Science, INFORMS, vol. 51(1), pages 30-44, January.
    20. Albert Y. Ha & Shilu Tong, 2008. "Contracting and Information Sharing Under Supply Chain Competition," Management Science, INFORMS, vol. 54(4), pages 701-715, April.
    Full references (including those not matched with items on IDEAS)

    Citations

    Citations are extracted by the CitEc Project, subscribe to its RSS feed for this item.
    as


    Cited by:

    1. Xin Yun & Hao Liu & Yi Li & Kin Keung Lai, 2023. "Contract design under asymmetric demand information for sustainable supply chain practices," Annals of Operations Research, Springer, vol. 324(1), pages 1429-1459, May.
    2. Yenipazarli, Arda, 2021. "Downstream entry revisited: Economic effects of entry in vertically-related markets," Omega, Elsevier, vol. 103(C).
    3. Hsiao, Lu & Chen, Ying-Ju & Xiong, Hui & Liu, Haoyu, 2022. "Incentives for disclosing the store brand supplier," Omega, Elsevier, vol. 109(C).
    4. Zhong, Yuanguang & Liu, Ju & Zhou, Yong-Wu & Cao, Bin & Cheng, T.C. Edwin, 2022. "Robust contract design and coordination under consignment contracts with revenue sharing," International Journal of Production Economics, Elsevier, vol. 253(C).
    5. Li, Xi & Liu, Qian, 2023. "Strategic ignorance: Managing endogenous demand in a supply chain," Omega, Elsevier, vol. 114(C).
    6. Niu, Baozhuang & Xu, Haotao & Dai, Zhipeng, 2022. "Check Only Once? Health Information Exchange between Competing Private Hospitals," Omega, Elsevier, vol. 107(C).
    7. Li, Qiu-xiang & Ji, Hui-min & Huang, Yi-min, 2022. "The information leakage strategies of the supply chain under the block chain technology introduction," Omega, Elsevier, vol. 110(C).
    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).

    Most related items

    These are the items that most often cite the same works as this one and are cited by the same works as this one.
    1. Noam Shamir & Hyoduk Shin, 2016. "Public Forecast Information Sharing in a Market with Competing Supply Chains," Management Science, INFORMS, vol. 62(10), pages 2994-3022, October.
    2. Avinadav, Tal & Shamir, Noam, 2021. "The effect of information asymmetry on ordering and capacity decisions in supply chains," European Journal of Operational Research, Elsevier, vol. 292(2), pages 562-578.
    3. Leon Yang Chu & Noam Shamir & Hyoduk Shin, 2017. "Strategic Communication for Capacity Alignment with Pricing in a Supply Chain," Management Science, INFORMS, vol. 63(12), pages 4366-4377, December.
    4. Guangwen Kong & Sampath Rajagopalan & Hao Zhang, 2013. "Revenue Sharing and Information Leakage in a Supply Chain," Management Science, INFORMS, vol. 59(3), pages 556-572, November.
    5. Wu, Junjian & Wang, Haiyan & Shang, Jennifer, 2019. "Multi-sourcing and information sharing under competition and supply uncertainty," European Journal of Operational Research, Elsevier, vol. 278(2), pages 658-671.
    6. Noam Shamir, 2017. "Cartel Formation Through Strategic Information Leakage in a Distribution Channel," Marketing Science, INFORMS, vol. 36(1), pages 70-88, January.
    7. Xin Yun & Hao Liu & Yi Li & Kin Keung Lai, 2023. "Contract design under asymmetric demand information for sustainable supply chain practices," Annals of Operations Research, Springer, vol. 324(1), pages 1429-1459, May.
    8. Ruomeng Cui & Hyoduk Shin, 2018. "Sharing Aggregate Inventory Information with Customers: Strategic Cross-Selling and Shortage Reduction," Management Science, INFORMS, vol. 64(1), pages 381-400, January.
    9. Li, Xiaojing & Chen, Jing & Ai, Xingzheng, 2019. "Contract design in a cross-sales supply chain with demand information asymmetry," European Journal of Operational Research, Elsevier, vol. 275(3), pages 939-956.
    10. Guo Li & Lin Tian & Hong Zheng, 2021. "Information Sharing in an Online Marketplace with Co‐opetitive Sellers," Production and Operations Management, Production and Operations Management Society, vol. 30(10), pages 3713-3734, October.
    11. Zhou, Maosen & Dan, Bin & Ma, Songxuan & Zhang, Xumei, 2017. "Supply chain coordination with information sharing: The informational advantage of GPOs," European Journal of Operational Research, Elsevier, vol. 256(3), pages 785-802.
    12. Arcan Nalca, & Tamer Boyaci, & Saibal Ray, 2017. "Consumer taste uncertainty in the context of store brand and national brand competition," ESMT Research Working Papers ESMT-17-01, ESMT European School of Management and Technology.
    13. Zhang, Chu & Liu, Bin & Cai, Gangshu George & Huang, Tao, 2023. "When ignorance is bliss: The retailer’s intelligence hazard under information sharing and exchanging," Transportation Research Part E: Logistics and Transportation Review, Elsevier, vol. 180(C).
    14. Zhongyuan Hao & Li Jiang & Wenli Wang, 2018. "Impacts of sequential acquisition, market competition mode, and confidentiality on information flow," Naval Research Logistics (NRL), John Wiley & Sons, vol. 65(2), pages 135-159, March.
    15. Yong Zha & Quan Li & Tingliang Huang & Yugang Yu, 2023. "Strategic Information Sharing of Online Platforms as Resellers or Marketplaces," Marketing Science, INFORMS, vol. 42(4), pages 659-678, July.
    16. Lu, Jizhou & Feng, Gengzhong & Shum, Stephen & Lai, Kin Keung, 2021. "On the value of information sharing in the presence of information errors," European Journal of Operational Research, Elsevier, vol. 294(3), pages 1139-1152.
    17. Li, Tian & Zhang, Hongtao, 2015. "Information sharing in a supply chain with a make-to-stock manufacturer," Omega, Elsevier, vol. 50(C), pages 115-125.
    18. Hamid Nazerzadeh & Georgia Perakis, 2016. "Technical Note—Nonlinear Pricing Competition with Private Capacity Information," Operations Research, INFORMS, vol. 64(2), pages 329-340, April.
    19. Yiwei Chen & Özalp Özer, 2019. "Supply Chain Contracts That Prevent Information Leakage," Management Science, INFORMS, vol. 65(12), pages 5619-5650, December.
    20. Zhang, Shichen & Zhang, Jianxiong & Zhu, Guowei, 2019. "Retail service investing: An anti-encroachment strategy in a retailer-led supply chain," Omega, Elsevier, vol. 84(C), pages 212-231.

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:eee:jomega:v:90:y:2020:i:c:s030504831730659x. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a bibliographic reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: Catherine Liu (email available below). General contact details of provider: http://www.elsevier.com/wps/find/journaldescription.cws_home/375/description#description .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.