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Supply chain configuration under information sharing

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  • Kashefi, Mohammad Ali

Abstract

This paper examines the effect of information sharing on supply chain configuration where the market characterized by demand uncertainty. A dynamic multi-stage game theoretic model with incomplete information is employed to capture the sequence of events. Our supply chain consists of two suppliers with exogenous wholesale prices and two retailers, the incumbent and the entrant, with asymmetric demand information. Informed incumbent prefers to conceal its private information from the entrant in order to reap more profits in the market. The channel of information flows is only through the first supplier and the incumbent can supply just from him, but the entrant is free to choose its proper supplier considering the point that the second supplier is uninformed. Our analytical model demonstrates that how the mean demand of the market, wherein our retailers compete, and its relation with the relative wholesale price of the suppliers play crucial role in equilibrium determination. Our results show under which circumstances separation and pooling equilibrium could occur in some range of demand variation. It is also shown that the entrant sometimes prefers to avoid information acquisition by choosing the second supplier and playing Cournot instead of Stackelberg which is more profitable for him in some occasions.

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Bibliographic Info

Paper provided by University Library of Munich, Germany in its series MPRA Paper with number 41460.

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Date of creation: 20 Sep 2012
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Handle: RePEc:pra:mprapa:41460

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Related research

Keywords: Information Sharing; Asymmetric Information; Supply Chain; Dynamic Game; Signaling Game; Demand Uncertainty; Strategic Information Management;

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  1. Cho, In-Koo & Kreps, David M, 1987. "Signaling Games and Stable Equilibria," The Quarterly Journal of Economics, MIT Press, vol. 102(2), pages 179-221, May.
  2. Amir Ziv, 1993. "Information Sharing in Oligopoly: The Truth-Telling Problem," RAND Journal of Economics, The RAND Corporation, vol. 24(3), pages 455-465, Autumn.
  3. Albert Y. Ha & Shilu Tong, 2008. "Contracting and Information Sharing Under Supply Chain Competition," Management Science, INFORMS, vol. 54(4), pages 701-715, April.
  4. GĂ©rard 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.
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