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Non-Credible Information Flows Between Food Manufacturers And Retailers

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  • DeVuyst, Cheryl Sinn

Abstract

Asymmetric information between food manufacturers and retailers constrains the efforts of analysts studying the retail food chain. The problem may be especially pronounced during new product introductions. Manufacturers may have demand information about new products but have incentives to not credibly relay that information. Retailers often lack reliable demand information about new products. Understanding the roots of non-credible information flows within the manufacturer/retailer relationship is important to behavioral modeling in the food chain. This paper provides an analytic derivation to explain sufficient conditions for non-credible information flows leading to asymmetric information and adverse selection problems. Results provide insight about formation of information sharing mechanisms in the retail grocery channel.

Suggested Citation

  • DeVuyst, Cheryl Sinn, 2002. "Non-Credible Information Flows Between Food Manufacturers And Retailers," Journal of Food Distribution Research, Food Distribution Research Society, vol. 33(3), pages 1-7, November.
    • Handle: RePEc:ags:jlofdr:26830
    DOI: 10.22004/ag.econ.26830
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    References listed on IDEAS

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    1. George A. Akerlof, 1970. "The Market for "Lemons": Quality Uncertainty and the Market Mechanism," The Quarterly Journal of Economics, President and Fellows of Harvard College, vol. 84(3), pages 488-500.
    2. Paul M. Patterson & Timothy J. Richards, 2000. "Produce Marketing and Retail Buying Practices," Review of Agricultural Economics, Agricultural and Applied Economics Association, vol. 22(1), pages 160-171.
    3. Martin A. Lariviere & V. Padmanabhan, 1997. "Slotting Allowances and New Product Introductions," Marketing Science, INFORMS, vol. 16(2), pages 112-128.
    4. Bester, Helmut, 1985. "Screening vs. Rationing in Credit Markets with Imperfect Information," American Economic Review, American Economic Association, vol. 75(4), pages 850-855, September.
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    Cited by:

    1. DeVuyst Cheryl S, 2005. "Demand Screening with Slotting Allowances and Failure Fees," Journal of Agricultural & Food Industrial Organization, De Gruyter, vol. 3(2), pages 1-19, June.

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