Information sharing and contracting with manufacturers on a hybrid platform

This study explores demand information sharing and contracting between a platform and two manufacturers, where one adopts the agency channel (referred to as the agency manufacturer) and the other uses the reselling channel (referred to as the reselling manufacturer). We systematically characterize the platform’s optimal strategies for voluntary information sharing and for information contracting with side payments under both concurrent and sequential scenarios. Our analysis yields several intriguing findings. Contrary to existing studies suggesting firms should avoid sharing demand information with other firms when they decide on quantity and offer substitute products, this study shows that a platform might voluntarily share demand information with the agency manufacturer to earn a higher commission. Moreover, the literature generally suggests that downstream firms should conceal demand information from upstream partners to avoid the negative double marginalization effect of information sharing, and that demand information contracting is infeasible even with side payments. This study shows that the presence of the agency manufacturer can alter this outcome, and the competition between the platform and the agency manufacturer can mitigate the double marginalization effect when products are substitutes. Consequently, demand information sharing can be sustained between the platform and the reselling manufacturer under both concurrent and sequential contracting scenarios. We further reveal that sequential contracting (weakly) dominates concurrent contracting for the platform and enhances supply chain profit. Lastly, we extend the quantity competition model to the price model and confirm that the main results remain robust.