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Strategic information sharing between competing retailers in a supply chain with endogenous wholesale price

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  • Shamir, Noam

Abstract

This paper introduces a new motivation for information sharing in decentralized supply chains—as a mechanism to achieve truthful information sharing and to reduce signaling costs. We study a two-echelon supply chain with one manufacturer selling a homogenous product to n price-setting competing retailers. Each retailer has access to private information about the potential market demand, and the retailers have an ex-ante incentive to share this information with each other and to conceal the information from the manufacturer. However, without a mechanism that induces the retailers to truthful information exchange as their strategic choice, no information can be exchanged via pure communication (cheap talk). To overcome this obstacle, two signaling games are analyzed: in the first game, information is shared truthfully among the retailers; in the second game, information is also shared truthfully with the manufacturer. We show that under some conditions sharing information with the manufacturer results in a higher profit for the retailers.

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  • Shamir, Noam, 2012. "Strategic information sharing between competing retailers in a supply chain with endogenous wholesale price," International Journal of Production Economics, Elsevier, vol. 136(2), pages 352-365.
    • Handle: RePEc:eee:proeco:v:136:y:2012:i:2:p:352-365
    DOI: 10.1016/j.ijpe.2011.12.023
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    Cited by:

    1. 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.
    2. 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.
    3. Wei-Shiun Chang & Daniel A. Sanchez-Loor, 2020. "Downstream Information Leaking and Information Sharing Between Partially Informed Retailers," Journal of Industry, Competition and Trade, Springer, vol. 20(4), pages 733-760, December.
    4. 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.
    5. Matsui, Kenji, 2021. "Buyer’s strategic demand information sharing with an upstream echelon for entry promotion," International Journal of Production Economics, Elsevier, vol. 242(C).
    6. Bian, Junsong & Guo, Xiaolei & Lai, Kin Keung & Hua, Zhongsheng, 2014. "The strategic peril of information sharing in a vertical-Nash supply chain: A note," International Journal of Production Economics, Elsevier, vol. 158(C), pages 37-43.
    7. Hamed Jafari & Seyed Reza Hejazi & Morteza Rasti-Barzoki, 2016. "Pricing Decisions in Dual-Channel Supply Chain Including Monopolistic Manufacturer and Duopolistic Retailers: A Game-Theoretic Approach," Journal of Industry, Competition and Trade, Springer, vol. 16(3), pages 323-343, September.
    8. Kostas Bimpikis & Davide Crapis & Alireza Tahbaz-Salehi, 2019. "Information Sale and Competition," Management Science, INFORMS, vol. 67(6), pages 2646-2664, June.
    9. Shi, Jia & Chu, Lap Keung & Luo, Huajiang, 2023. "Voluntary information disclosure of an e-commerce platform under reselling, marketplace, and hybrid selling," International Journal of Production Economics, Elsevier, vol. 265(C).
    10. Hu, Ming-Che & Chen, Yu-Hui & Huang, Li-Chun, 2014. "A sustainable vegetable supply chain using plant factories in Taiwanese markets: A Nash–Cournot model," International Journal of Production Economics, Elsevier, vol. 152(C), pages 49-56.
    11. Huang, Yanting & Wang, Zongjun, 2017. "Values of information sharing: A comparison of supplier-remanufacturing and manufacturer-remanufacturing scenarios," Transportation Research Part E: Logistics and Transportation Review, Elsevier, vol. 106(C), pages 20-44.
    12. Huang, Yanting & Wang, Zongjun, 2017. "Information sharing in a closed-loop supply chain with technology licensing," International Journal of Production Economics, Elsevier, vol. 191(C), pages 113-127.
    13. Jiang, Zhong-Zhong & Zhao, Jinlong & Zhang, Yinghao & Yi, Zelong, 2022. "Unraveling the cheap talk’s informativeness of product quality in supply chains: A lying aversion perspective," Transportation Research Part E: Logistics and Transportation Review, Elsevier, vol. 166(C).
    14. Ma, Miaomiao & Meng, Weidong & Huang, Bo & Li, Yuyu, 2023. "The influence of dual credit policy on new energy vehicle technology innovation under demand forecast information asymmetry," Energy, Elsevier, vol. 271(C).
    15. Guan, Zili & Zhang, Xumei & Zhou, Maosen & Dan, Yiran, 2020. "Demand information sharing in competing supply chains with manufacturer-provided service," International Journal of Production Economics, Elsevier, vol. 220(C).
    16. Bian, Wenliang & Shang, Jennifer & Zhang, Juliang, 2016. "Two-way information sharing under supply chain competition," International Journal of Production Economics, Elsevier, vol. 178(C), pages 82-94.
    17. Avinadav, Tal & Chernonog, Tatyana & Khmelnitsky, Eugene, 2021. "Revenue-sharing between developers of virtual products and platform distributors," European Journal of Operational Research, Elsevier, vol. 290(3), pages 927-945.
    18. Albert Y. Ha & Quan Tian & Shilu Tong, 2017. "Information Sharing in Competing Supply Chains with Production Cost Reduction," Manufacturing & Service Operations Management, INFORMS, vol. 19(2), pages 246-262, May.

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