IDEAS home Printed from https://ideas.repec.org/a/eee/jbrese/v64y2011i4p377-384.html
   My bibliography  Save this article

Information asymmetry, pricing strategy and firm's performance in the retailer- multi-channel manufacturer supply chain

Author

Listed:
  • Yan, Ruiliang
  • Pei, Zhi

Abstract

In this research paper, we assume a retailer-multi-channel manufacturer (with online and traditional retail channels) supply chain where both the multi-channel manufacturer and the retailer have private information about the state of consumer demand. In this setting, we examine the effect of an information sharing strategy on both firms' performance. Our results show that the multi-channel manufacturer always benefits from an information sharing strategy. When the product is highly compatible with the online channel, information sharing becomes much more valuable to the multi-channel manufacturer. On the other hand, the retailer's performance is not impacted by an information sharing strategy. Thus, a bargaining model is utilized to implement profit sharing for the multi-channel manufacturer and retailer so that an information sharing equilibrium can be reached. Based on our results, we derive optimal market strategies and identify probable paths of future research.

Suggested Citation

  • Yan, Ruiliang & Pei, Zhi, 2011. "Information asymmetry, pricing strategy and firm's performance in the retailer- multi-channel manufacturer supply chain," Journal of Business Research, Elsevier, vol. 64(4), pages 377-384, April.
    • Handle: RePEc:eee:jbrese:v:64:y:2011:i:4:p:377-384
    as

    Download full text from publisher

    File URL: http://www.sciencedirect.com/science/article/pii/S0148-2963(10)00230-4
    Download Restriction: Full text for ScienceDirect subscribers only
    ---><---

    As the access to this document is restricted, you may want to search for a different version of it.

    References listed on IDEAS

    as
    1. Mahmut Parlar & Z. Kevin Weng, 1997. "Designing a Firm's Coordinated Manufacturing and Supply Decisions with Short Product Life Cycles," Management Science, INFORMS, vol. 43(10), pages 1329-1344, October.
    2. 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.
    3. Lages, Carmen & Lages, Cristiana Raquel & Lages, Luis Filipe, 2005. "The RELQUAL scale: a measure of relationship quality in export market ventures," Journal of Business Research, Elsevier, vol. 58(8), pages 1040-1048, August.
    4. Nanda Kumar & Ranran Ruan, 2006. "On manufacturers complementing the traditional retail channel with a direct online channel," Quantitative Marketing and Economics (QME), Springer, vol. 4(3), pages 289-323, September.
    5. Li, Susan X. & Huang, Zhimin & Zhu, Joe & Chau, Patrick Y. K., 2002. "Cooperative advertising, game theory and manufacturer-retailer supply chains," Omega, Elsevier, vol. 30(5), pages 347-357, October.
    6. Seifert, Ralf W. & Thonemann, Ulrich W. & Sieke, Marcel A., 2006. "Integrating direct and indirect sales channels under decentralized decision-making," International Journal of Production Economics, Elsevier, vol. 103(1), pages 209-229, September.
    7. Mukhopadhyay, Samar K. & Yao, Dong-Qing & Yue, Xiaohang, 2008. "Information sharing of value-adding retailer in a mixed channel hi-tech supply chain," Journal of Business Research, Elsevier, vol. 61(9), pages 950-958, September.
    8. Yue, Xiaohang & Liu, John, 2006. "Demand forecast sharing in a dual-channel supply chain," European Journal of Operational Research, Elsevier, vol. 174(1), pages 646-667, October.
    9. Vives, Xavier, 1984. "Duopoly information equilibrium: Cournot and bertrand," Journal of Economic Theory, Elsevier, vol. 34(1), pages 71-94, October.
    10. Nash, John, 1950. "The Bargaining Problem," Econometrica, Econometric Society, vol. 18(2), pages 155-162, April.
    11. Esther Gal-Or, 2004. "Evaluating the Profitability of Product Bundling in the Context of Negotiations," The Journal of Business, University of Chicago Press, vol. 77(4), pages 639-674, October.
    12. Eastlick, Mary Ann & Lotz, Sherry L. & Warrington, Patricia, 2006. "Understanding online B-to-C relationships: An integrated model of privacy concerns, trust, and commitment," Journal of Business Research, Elsevier, vol. 59(8), pages 877-886, August.
    13. Chuan He & Johan Marklund & Thomas Vossen, 2008. "—Vertical Information Sharing in a Volatile Market," Marketing Science, INFORMS, vol. 27(3), pages 513-530, 05-06.
    14. Kay-Yut Chen & Murat Kaya & Özalp Özer, 2008. "Dual Sales Channel Management with Service Competition," Manufacturing & Service Operations Management, INFORMS, vol. 10(4), pages 654-675, June.
    15. Srinagesh Gavirneni, 2002. "Information Flows in Capacitated Supply Chains with Fixed Ordering Costs," Management Science, INFORMS, vol. 48(5), pages 644-651, May.
    16. Rajiv Lal & Miklos Sarvary, 1999. "When and How Is the Internet Likely to Decrease Price Competition?," Marketing Science, INFORMS, vol. 18(4), pages 485-503.
    17. Jagmohan S. Raju & Abhik Roy, 2000. "Market Information and Firm Performance," Management Science, INFORMS, vol. 46(8), pages 1075-1084, August.
    18. Wei-yu Kevin Chiang & Dilip Chhajed & James D. Hess, 2003. "Direct Marketing, Indirect Profits: A Strategic Analysis of Dual-Channel Supply-Chain Design," Management Science, INFORMS, vol. 49(1), pages 1-20, January.
    19. Rajeev Kohli & Heungsoo Park, 1989. "A Cooperative Game Theory Model of Quantity Discounts," Management Science, INFORMS, vol. 35(6), pages 693-707, June.
    20. 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.
    21. Yossi Aviv, 2001. "The Effect of Collaborative Forecasting on Supply Chain Performance," Management Science, INFORMS, vol. 47(10), pages 1326-1343, October.
    22. Dixit, Ashutosh & Whipple, Thomas W. & Zinkhan, George M. & Gailey, Edward, 2008. "A taxonomy of information technology-enhanced pricing strategies," Journal of Business Research, Elsevier, vol. 61(4), pages 275-283, April.
    23. Srinagesh Gavirneni & Roman Kapuscinski & Sridhar Tayur, 1999. "Value of Information in Capacitated Supply Chains," Management Science, INFORMS, vol. 45(1), pages 16-24, January.
    24. Yue, Xiaohang & Mukhopadhyay, Samar K. & Zhu, Xiaowei, 2006. "A Bertrand model of pricing of complementary goods under information asymmetry," Journal of Business Research, Elsevier, vol. 59(10-11), pages 1182-1192, October.
    Full references (including those not matched with items on IDEAS)

    Citations

    Citations are extracted by the CitEc Project, subscribe to its RSS feed for this item.
    as


    Cited by:

    1. Rekha Guchhait & Sarla Pareek & Biswajit Sarkar, 2019. "How Does a Radio Frequency Identification Optimize the Profit in an Unreliable Supply Chain Management?," Mathematics, MDPI, vol. 7(6), pages 1-19, May.
    2. Zhiying Hu & Haiyan Yang & Yuyu Zhang & Jenny Jing Wang, 2023. "Does common auditor have an impact on corporate tax avoidance? An investigation from the supply chain perspective," Accounting and Finance, Accounting and Finance Association of Australia and New Zealand, vol. 63(1), pages 575-629, March.
    3. Karimi, Majid & Zaerpour, Nima, 2022. "Put your money where your forecast is: Supply chain collaborative forecasting with cost-function-based prediction markets," European Journal of Operational Research, Elsevier, vol. 300(3), pages 1035-1049.
    4. Xu, Guangye & Dan, Bin & Zhang, Xumei & Liu, Can, 2014. "Coordinating a dual-channel supply chain with risk-averse under a two-way revenue sharing contract," International Journal of Production Economics, Elsevier, vol. 147(PA), pages 171-179.
    5. Liu, Mengqi & Cao, Erbao & Salifou, Coulibaly Kigbajah, 2016. "Pricing strategies of a dual-channel supply chain with risk aversion," Transportation Research Part E: Logistics and Transportation Review, Elsevier, vol. 90(C), pages 108-120.
    6. Amrouche, Nawel & Yan, Ruiliang, 2012. "Implementing online store for national brand competing against private label," Journal of Business Research, Elsevier, vol. 65(3), pages 325-332.
    7. He, Peng & He, Yong & Xu, Henry, 2020. "Buy-online-and-deliver-from-store strategy for a dual-channel supply chain considering retailer’s location advantage," Transportation Research Part E: Logistics and Transportation Review, Elsevier, vol. 144(C).
    8. Sener, Abdurrezzak & Barut, Mehmet & Oztekin, Asil & Avcilar, Mutlu Yuksel & Yildirim, Mehmet Bayram, 2019. "The role of information usage in a retail supply chain: A causal data mining and analytical modeling approach," Journal of Business Research, Elsevier, vol. 99(C), pages 87-104.
    9. Yan, Bo & Wang, Tao & Liu, Yan-ping & Liu, Yang, 2016. "Decision analysis of retailer-dominated dual-channel supply chain considering cost misreporting," International Journal of Production Economics, Elsevier, vol. 178(C), pages 34-41.
    10. Qiuxiang Li & Mengnan Shi & Yimin Huang, 2019. "A Dynamic Price Game Model in a Low-Carbon, Closed-Loop Supply Chain Considering Return Rates and Fairness Concern Behaviors," IJERPH, MDPI, vol. 16(11), pages 1-21, June.
    11. Yan, Ruiliang & Cao, Zixia, 2017. "Product returns, asymmetric information, and firm performance," International Journal of Production Economics, Elsevier, vol. 185(C), pages 211-222.
    12. Hui-Chih Hung & Chung-Yu Chung & Muh-Cherng Wu & Wan-Ling Shen, 2017. "A membership pricing policy to facilitate service scale-expansion," The Service Industries Journal, Taylor & Francis Journals, vol. 37(3-4), pages 167-189, March.
    13. Juhong Chen & Di Wu & Peng Li, 2018. "Research on the Pricing Model of the Dual-Channel Reverse Supply Chain Considering Logistics Costs and Consumers’ Awareness of Sustainability Based on Regional Differences," Sustainability, MDPI, vol. 10(7), pages 1-31, June.
    14. Pei, Zhi & Yan, Ruiliang, 2013. "National advertising, dual-channel coordination and firm performance," Journal of Retailing and Consumer Services, Elsevier, vol. 20(2), pages 218-224.
    15. Saghiri, Soroosh & Wilding, Richard & Mena, Carlos & Bourlakis, Michael, 2017. "Toward a three-dimensional framework for omni-channel," Journal of Business Research, Elsevier, vol. 77(C), pages 53-67.
    16. Xuelong Zhang & Huili Xu & Chenhui Zhang & Shuang Xiao & Ying Zhang, 2022. "Pricing Decision Models of the Dual Channel Supply Chain with Service Level and Return," Energies, MDPI, vol. 15(23), pages 1-13, December.
    17. Raghu Nandan Giri & Shyamal Kumar Mondal & Manoranjan Maiti, 2021. "Analysis of strategies for substitutable and complementary products in a two-levels fuzzy supply chain system," Operational Research, Springer, vol. 21(1), pages 485-524, March.
    18. Xie, JiaPing & Liang, Ling & Liu, LuHao & Ieromonachou, Petros, 2017. "Coordination contracts of dual-channel with cooperation advertising in closed-loop supply chains," International Journal of Production Economics, Elsevier, vol. 183(PB), pages 528-538.
    19. Yan, Ruiliang & Cao, Zixia & Pei, Zhi, 2016. "Manufacturer's cooperative advertising, demand uncertainty, and information sharing," Journal of Business Research, Elsevier, vol. 69(2), pages 709-717.
    20. T. M. Rofin & Biswajit Mahanty, 2018. "Optimal dual-channel supply chain configuration for product categories with different customer preference of online channel," Electronic Commerce Research, Springer, vol. 18(3), pages 507-536, September.
    21. Bhatnagar, Amit & Syam, Siddhartha S., 2014. "Allocating a hybrid retailer's assortment across retail stores: Bricks-and-mortar vs online," Journal of Business Research, Elsevier, vol. 67(6), pages 1293-1302.
    22. Fu, Ke & Wang, Ce & Xu, Jiayan, 2022. "The impact of trade credit on information sharing in a supply chain," Omega, Elsevier, vol. 110(C).
    23. Raj, S.P. & Rhee, Byong-Duk & Sivakumar, K., 2020. "Manufacturer adoption of a unilateral pricing policy in a multi-channel setting to combat customer showrooming," Journal of Business Research, Elsevier, vol. 110(C), pages 104-118.
    24. Pei, Zhi & Yan, Ruiliang, 2015. "Do channel members value supportive retail services? Why?," Journal of Business Research, Elsevier, vol. 68(6), pages 1350-1358.
    25. Shujun Yang & Ivan Kai Wai Lai & Huajun Tang, 2022. "Pricing and Contract Coordination of BOPS Supply Chain Considering Product Return Risk," Sustainability, MDPI, vol. 14(9), pages 1-21, April.

    Most related items

    These are the items that most often cite the same works as this one and are cited by the same works as this one.
    1. Yan, Ruiliang & Guo, Peijun & Wang, John & Amrouche, Nawel, 2011. "Product distribution and coordination strategies in a multi-channel context," Journal of Retailing and Consumer Services, Elsevier, vol. 18(1), pages 19-26.
    2. Yan, Ruiliang & Ghose, Sanjoy, 2010. "Forecast information and traditional retailer performance in a dual-channel competitive market," Journal of Business Research, Elsevier, vol. 63(1), pages 77-83, January.
    3. Yan, Ruiliang, 2010. "Demand forecast information sharing in the competitive online and traditional retailers," Journal of Retailing and Consumer Services, Elsevier, vol. 17(5), pages 386-394.
    4. Rakesh Niraj & Chakravarthi Narasimhan, 2017. "Examining Incentives to Share Demand Information with your Channel Partner," International Journal of Information Technology & Decision Making (IJITDM), World Scientific Publishing Co. Pte. Ltd., vol. 16(04), pages 961-980, July.
    5. Yue, Xiaohang & Liu, John, 2006. "Demand forecast sharing in a dual-channel supply chain," European Journal of Operational Research, Elsevier, vol. 174(1), pages 646-667, October.
    6. Nawel Amrouche & Ruiliang Yan, 2016. "A manufacturer distribution issue: how to manage an online and a traditional retailer," Annals of Operations Research, Springer, vol. 244(2), pages 257-294, September.
    7. Mukhopadhyay, Samar K. & Yue, Xiaohang & Zhu, Xiaowei, 2011. "A Stackelberg model of pricing of complementary goods under information asymmetry," International Journal of Production Economics, Elsevier, vol. 134(2), pages 424-433, December.
    8. Bian, Junsong & Guo, Xiaolei & Lai, Kin Keung & Hua, Zhongsheng, 2014. "The strategic peril of information sharing in a vertical-Nash supply chain: A note," International Journal of Production Economics, Elsevier, vol. 158(C), pages 37-43.
    9. Xiaowei Zhu, 2017. "Outsourcing management under various demand Information Sharing scenarios," Annals of Operations Research, Springer, vol. 257(1), pages 449-467, October.
    10. Yao, Dong-Qing & Yue, Xiaohang & Wang, Xiaoyin & Liu, John J., 2005. "The impact of information sharing on a returns policy with the addition of a direct channel," International Journal of Production Economics, Elsevier, vol. 97(2), pages 196-209, August.
    11. Yan, Ruiliang & Pei, Zhi & Ghose, Sanjoy, 2019. "Reward points, profit sharing, and valuable coordination mechanism in the O2O era," International Journal of Production Economics, Elsevier, vol. 215(C), pages 34-47.
    12. Yan, Ruiliang & Cao, Zixia & Pei, Zhi, 2016. "Manufacturer's cooperative advertising, demand uncertainty, and information sharing," Journal of Business Research, Elsevier, vol. 69(2), pages 709-717.
    13. Esther Gal-Or & Tansev Geylani & Anthony J. Dukes, 2008. "Information Sharing in a Channel with Partially Informed Retailers," Marketing Science, INFORMS, vol. 27(4), pages 642-658, 07-08.
    14. Takahashi, Katsuhiko & Aoi, Takahiko & Hirotani, Daisuke & Morikawa, Katsumi, 2011. "Inventory control in a two-echelon dual-channel supply chain with setup of production and delivery," International Journal of Production Economics, Elsevier, vol. 133(1), pages 403-415, September.
    15. Li, Tian & Zhang, Hongtao, 2015. "Information sharing in a supply chain with a make-to-stock manufacturer," Omega, Elsevier, vol. 50(C), pages 115-125.
    16. Pei, Zhi & Toombs, Leslie & Yan, Ruiliang, 2014. "How does the added new online channel impact the supporting advertising expenditure?," Journal of Retailing and Consumer Services, Elsevier, vol. 21(3), pages 229-238.
    17. Yan, Bo & Wang, Tao & Liu, Yan-ping & Liu, Yang, 2016. "Decision analysis of retailer-dominated dual-channel supply chain considering cost misreporting," International Journal of Production Economics, Elsevier, vol. 178(C), pages 34-41.
    18. Zach Zhizhong Zhou & Kevin Xiaoguo Zhu, 2010. "The Effects of Information Transparency on Suppliers, Manufacturers, and Consumers in Online Markets," Marketing Science, INFORMS, vol. 29(6), pages 1125-1137, 11-12.
    19. Kaijie Zhu & Ulrich W. Thonemann, 2004. "Modeling the Benefits of Sharing Future Demand Information," Operations Research, INFORMS, vol. 52(1), pages 136-147, February.
    20. Ting Zhang & Xiaowei Zhu & Qinglong Gou, 2017. "Demand Forecasting and Pricing Decision with the Entry of Store Brand under Various Information Sharing Scenarios," Asia-Pacific Journal of Operational Research (APJOR), World Scientific Publishing Co. Pte. Ltd., vol. 34(02), pages 1-26, April.

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:eee:jbrese:v:64:y:2011:i:4:p:377-384. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a bibliographic reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: Catherine Liu (email available below). General contact details of provider: http://www.elsevier.com/locate/jbusres .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.