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Coordination of information sharing in a supply chain

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  • Zhang, Juliang
  • Chen, Jian
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    Abstract

    In this paper, we study information sharing in a supply chain consisting of one supplier and one retailer, in which both the supplier and the retailer possess partial information on the demand. Under the single price contract, we show that whether a firm reveals its private information depends on the quality (variance) and the correlation of the two firms' information and the other firm's information revelation behavior. For the case that one firm (the retailer or the supplier) has complete information on the demand, the equilibrium is that the firm with complete information conceals its information and another reveals its information. Finally, we show that revenue sharing contract is coordinative, which ensures that both firms share their information completely and the retailer chooses the sale quantity which maximizes the total profit of the supply chain. This study shows that the members in a supply chain must sign coordinative contract in order to ensure that they share their information.

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    Bibliographic Info

    Article provided by Elsevier in its journal International Journal of Production Economics.

    Volume (Year): 143 (2013)
    Issue (Month): 1 ()
    Pages: 178-187

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    Handle: RePEc:eee:proeco:v:143:y:2013:i:1:p:178-187

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    Web page: http://www.elsevier.com/locate/ijpe

    Related research

    Keywords: Information sharing; Contract; Supply chain; Coordination;

    References

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    1. Richard N. Clarke, 1983. "Collusion and the Incentives for Information Sharing," Bell Journal of Economics, The RAND Corporation, vol. 14(2), pages 383-394, Autumn.
    2. 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.
    3. Gal-Or, Esther, 1985. "Information Sharing in Oligopoly," Econometrica, Econometric Society, vol. 53(2), pages 329-43, March.
    4. Lode Li, 2002. "Information Sharing in a Supply Chain with Horizontal Competition," Management Science, INFORMS, vol. 48(9), pages 1196-1212, September.
    5. Gérard P. Cachon & Marshall Fisher, 2000. "Supply Chain Inventory Management and the Value of Shared Information," Management Science, INFORMS, vol. 46(8), pages 1032-1048, August.
    6. Giannoccaro, Ilaria & Pontrandolfo, Pierpaolo, 2004. "Supply chain coordination by revenue sharing contracts," International Journal of Production Economics, Elsevier, vol. 89(2), pages 131-139, May.
    7. Stephen C. Graves, 1999. "A Single-Item Inventory Model for a Nonstationary Demand Process," Manufacturing & Service Operations Management, INFORMS, vol. 1(1), pages 50-61.
    8. Lode Li, 2002. "Information Sharing in a Supply Chain with Horizontal Competition," Yale School of Management Working Papers ysm288, Yale School of Management.
    9. Z. Kevin Weng, 1995. "Channel Coordination and Quantity Discounts," Management Science, INFORMS, vol. 41(9), pages 1509-1522, September.
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    12. 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.
    13. Shapiro, Carl, 1986. "Exchange of Cost Information in Oligopoly," Review of Economic Studies, Wiley Blackwell, vol. 53(3), pages 433-46, July.
    14. Raith, Michael, 1996. "A General Model of Information Sharing in Oligopoly," Journal of Economic Theory, Elsevier, vol. 71(1), pages 260-288, October.
    15. Andy A. Tsay, 1999. "The Quantity Flexibility Contract and Supplier-Customer Incentives," Management Science, INFORMS, vol. 45(10), pages 1339-1358, October.
    16. Albert Y. Ha & Shilu Tong, 2008. "Contracting and Information Sharing Under Supply Chain Competition," Management Science, INFORMS, vol. 54(4), pages 701-715, April.
    17. 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.
    18. 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.
    19. William Novshek & Hugo Sonnenschein, 1982. "Fulfilled Expectations Cournot Duopoly with Information Acquisition and Release," Bell Journal of Economics, The RAND Corporation, vol. 13(1), pages 214-218, Spring.
    20. Lode Li, 1985. "Cournot Oligopoly with Information Sharing," RAND Journal of Economics, The RAND Corporation, vol. 16(4), pages 521-536, Winter.
    21. Barry Alan Pasternack, 1985. "Optimal Pricing and Return Policies for Perishable Commodities," Marketing Science, INFORMS, vol. 4(2), pages 166-176.
    22. Stephen C. Graves, 1999. "Addendum to "A Single-Item Inventory Model for a Nonstationary Demand Process"," Manufacturing & Service Operations Management, INFORMS, vol. 1(2), pages 174-174.
    23. Charles J. Corbett & Xavier de Groote, 2000. "A Supplier's Optimal Quantity Discount Policy Under Asymmetric Information," Management Science, INFORMS, vol. 46(3), pages 444-450, March.
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    Cited by:
    1. Wu, Ing-Long & Chuang, Cheng-Hung & Hsu, Chien-Hua, 2014. "Information sharing and collaborative behaviors in enabling supply chain performance: A social exchange perspective," International Journal of Production Economics, Elsevier, vol. 148(C), pages 122-132.

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