Information sharing or not across the supply chain: The role of carbon emission reduction

This study is motivated by international retailers (e.g., Walmart and H&M) cooperating with their suppliers to reduce carbon emissions across supply chains. Information sharing is a strategy often used in collaborative mechanisms, and we investigate information sharing and study its effect on carbon emission reduction. We construct a formal Bayesian forecast updating model and find out that information sharing benefits the supplier but hurts the retailer. Demand information sharing has no impact on global emission reduction but significantly reduces the “wasted emission”, i.e., emission from producing unwanted products. Upgrading manufacturing technology provides an incentive for the retailer to share information with a highly cost-efficient supplier to achieve the reduction of global emission and wasted emission. Meanwhile, consumers’ green awareness strengthens this effect. We extend the model to investigate the impact of additional ordering cost in QR mode and risk-averse decision making behaviors, assessing information sharing’s effects in these cases. We demonstrate that information sharing can amplify treatments’ positive effects and diminish the measures’ negative influences when applied in the supply chain. The information-sharing mechanism does not always benefit the environment and supply chain, contrary to the popular belief that collaborative contracts between retailers and suppliers are always advantageous.