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VERTICAL INFORMATION EXCHANGE IN A SUPPLY CHAIN WITH DUOPOLY RETAILERS
Author(s) -
ZHANG HONGTAO
Publication year - 2002
Publication title -
production and operations management
Language(s) - English
Resource type - Journals
SCImago Journal Rank - 3.279
H-Index - 110
eISSN - 1937-5956
pISSN - 1059-1478
DOI - 10.1111/j.1937-5956.2002.tb00476.x
Subject(s) - business , bertrand competition , cournot competition , supply chain , duopoly , information sharing , upstream (networking) , downstream (manufacturing) , industrial organization , payment , competition (biology) , microeconomics , private information retrieval , information asymmetry , marketing , economics , computer science , finance , oligopoly , computer network , ecology , computer security , world wide web , biology
We consider a supply chain with one manufacturer in the upstream and two competing retailers in the downstream. The retailers sell differentiated goods and are endowed with some private demand information. The paper shows that the manufacturer's optimal strategy is independent of the type of downstream competition, Cournot or Bertrand, and that no information will be shared with the manufacturer on a voluntary basis. However, complete information sharing, which benefits all three parties, can be achieved through side payment when the retailers' information is statistically less accurate or when the leakage effect is more beneficial to the retailers.