IDEAS home Printed from https://ideas.repec.org/a/inm/ormnsc/v70y2024i3p1428-1447.html

Product Quality and Information Sharing in the Presence of Reviews

Author

Listed:
  • Dongwook Shin

    (School of Business and Management, Hong Kong University of Science and Technology, Clear Water Bay, Kowloon, Hong Kong)

  • Assaf Zeevi

    (Graduate School of Business, Columbia University, New York, New York 10027)

Abstract

This paper investigates the problem of information sharing between a retail platform and a manufacturer in a supply chain. We develop a stylized model salient to which is that the product’s quality is a priori unknown to customers, who can infer it from customer-generated reviews. The platform, in turn, has access to private information concerning the relationship between quality and demand, and the manufacturer can choose to acquire said information to help determine the quality of its product accordingly. Our analysis yields three main insights. First, information sharing in and of itself induces the manufacturer to improve quality. Second, under a wholesale price contract, information sharing and product reviews together have a negative effect on product quality: When each firm is able to adjust its price in response to the quality signal, it benefits the manufacturer and hinders the platform. Consequently, the presence of reviews discourages the platform from sharing information, and the manufacturer tends to produce a lower-quality product. Finally, the negative effect of product reviews on the supply chain can be mitigated when the platform can share less accurate information or when the platform and manufacturer make a commission contract, rather than a wholesale price contract.

Suggested Citation

  • Dongwook Shin & Assaf Zeevi, 2024. "Product Quality and Information Sharing in the Presence of Reviews," Management Science, INFORMS, vol. 70(3), pages 1428-1447, March.
    • Handle: RePEc:inm:ormnsc:v:70:y:2024:i:3:p:1428-1447
    DOI: 10.1287/mnsc.2023.4746
    as

    Download full text from publisher

    File URL: http://dx.doi.org/10.1287/mnsc.2023.4746
    Download Restriction: no
    File URL: https://libkey.io/10.1287/mnsc.2023.4746?utm_source=ideas
    LibKey link: if access is restricted and if your library uses this service, LibKey will redirect you to where you can use your library subscription to access this item
    ---><---

    References listed on IDEAS

    as
    1. J. Miguel Villas-Boas, 1998. "Product Line Design for a Distribution Channel," Marketing Science, INFORMS, vol. 17(2), pages 156-169.
    2. Malueg, David A. & Tsutsui, Shunichi O., 1996. "Duopoly information exchange: The case of unknown slope," International Journal of Industrial Organization, Elsevier, vol. 14(1), pages 119-136.
    3. Jean Tirole, 1988. "The Theory of Industrial Organization," MIT Press Books, The MIT Press, edition 1, volume 1, number 0262200716, December.
    4. 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.
    5. Lode Li & Hongtao Zhang, 2008. "Confidentiality and Information Sharing in Supply Chain Coordination," Management Science, INFORMS, vol. 54(8), pages 1467-1481, August.
    6. Yiangos Papanastasiou & Nicos Savva, 2017. "Dynamic Pricing in the Presence of Social Learning and Strategic Consumers," Management Science, INFORMS, vol. 63(4), pages 919-939, April.
    7. 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.
    8. Nirvikar Singh & Xavier Vives, 1984. "Price and Quantity Competition in a Differentiated Duopoly," RAND Journal of Economics, The RAND Corporation, vol. 15(4), pages 546-554, Winter.
    9. 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.
    10. Øystein Moen & Lars Jaako Havro & Einar Bjering, 2017. "Online consumers reviews: Examining the moderating effects of product type and product popularity on the review impact on sales," Cogent Business & Management, Taylor & Francis Journals, vol. 4(1), pages 1368114-136, January.
    11. Kinshuk Jerath & Sang-Hyun Kim & Robert Swinney, 2017. "Product Quality in a Distribution Channel with Inventory Risk," Marketing Science, INFORMS, vol. 36(5), pages 747-761, September.
    12. Hongyan Shi & Yunchuan Liu & Nicholas C. Petruzzi, 2013. "Consumer Heterogeneity, Product Quality, and Distribution Channels," Management Science, INFORMS, vol. 59(5), pages 1162-1176, May.
    13. Park, Cheol & Lee, Thae Min, 2009. "Antecedents of Online Reviews' Usage and Purchase Influence: An Empirical Comparison of U.S. and Korean Consumers," Journal of Interactive Marketing, Elsevier, vol. 23(4), pages 332-340.
    14. K. Sridhar Moorthy, 1984. "Market Segmentation, Self-Selection, and Product Line Design," Marketing Science, INFORMS, vol. 3(4), pages 288-307.
    15. Xiaowei Xu, 2009. "Optimal Price and Product Quality Decisions in a Distribution Channel," Management Science, INFORMS, vol. 55(8), pages 1347-1352, August.
    16. Mussa, Michael & Rosen, Sherwin, 1978. "Monopoly and product quality," Journal of Economic Theory, Elsevier, vol. 18(2), pages 301-317, August.
    17. Yaoguang Zhong & Ivan Ka Wai Lai & Fangfang Guo & Huajun Tang, 2020. "Effects of Partnership Quality and Information Sharing on Express Delivery Service Performance in the E-commerce Industry," Sustainability, MDPI, vol. 12(20), pages 1-19, October.
    18. Nelson, Phillip, 1970. "Information and Consumer Behavior," Journal of Political Economy, University of Chicago Press, vol. 78(2), pages 311-329, March-Apr.
    19. Gérard 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.
    20. Weixin Shang & Albert Y. Ha & Shilu Tong, 2016. "Information Sharing in a Supply Chain with a Common Retailer," Management Science, INFORMS, vol. 62(1), pages 245-263, January.
    21. Frank A. Wolak, 2003. "Measuring Unilateral Market Power in Wholesale Electricity Markets: The California Market, 1998–2000," American Economic Review, American Economic Association, vol. 93(2), pages 425-430, May.
    22. Pnina Feldman & Yiangos Papanastasiou & Ella Segev, 2019. "Social Learning and the Design of New Experience Goods," Management Science, INFORMS, vol. 65(5), pages 1502-1519, April.
    23. Xinxin Li & Lorin M. Hitt, 2008. "Self-Selection and Information Role of Online Product Reviews," Information Systems Research, INFORMS, vol. 19(4), pages 456-474, December.
    24. Serguei Netessine & Terry A. Taylor, 2007. "Product Line Design and Production Technology," Marketing Science, INFORMS, vol. 26(1), pages 101-117, 01-02.
    25. Albert Y. Ha & Quan Tian & Shilu Tong, 2017. "Information Sharing in Competing Supply Chains with Production Cost Reduction," Manufacturing & Service Operations Management, INFORMS, vol. 19(2), pages 246-262, May.
    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. Xiao, Lei & Dong, Ruixiao, 2026. "When should sellers offer rebates for consumer reviews," Journal of Retailing and Consumer Services, Elsevier, vol. 90(C).
    2. Mingli Yuan & Ruozhen Qiu & Minghe Sun & Zhi-Ping Fan, 2025. "Fuzzy robust optimization for a dual-channel supply chain with blockchain adoption under consumer perception and demand uncertainties," Fuzzy Optimization and Decision Making, Springer, vol. 24(2), pages 155-196, June.
    3. Zhou, Qiang & Guo, Xiaolong & Sun, Can, 2025. "The value of Augmented Reality on platform-based supply chains: Impact of Accuracy Effect and Entertainment Effect," Transportation Research Part E: Logistics and Transportation Review, Elsevier, vol. 194(C).
    4. Xu, Xiaoping & Chen, Xinru & Hou, Jinyan & Cheng, T.C.E. & Yu, Yugang & Zhou, Li, 2025. "Should live streaming be adopted for agricultural supply chain considering platform’s quality improvement and blockchain support?," Transportation Research Part E: Logistics and Transportation Review, Elsevier, vol. 195(C).
    5. Sun, Fei & Yang, Hui & Chen, Jing & Chen, Bintong & Yu, Bo, 2025. "Information service and quality strategies in a supply chain," Transportation Research Part E: Logistics and Transportation Review, Elsevier, vol. 199(C).

    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. Wong, Hartanto & Kim, Kilsun & Chhajed, Dilip, 2021. "Reducing channel inefficiency in product line design," International Journal of Production Economics, Elsevier, vol. 232(C).
    2. Pnina Feldman & Yiangos Papanastasiou & Ella Segev, 2019. "Social Learning and the Design of New Experience Goods," Management Science, INFORMS, vol. 65(5), pages 1502-1519, April.
    3. Baojun Jiang & Lin Tian, 2022. "Effects of Reactive Capacity on Product Quality and Firm Profitability in an Uncertain Market," Operations Research, INFORMS, vol. 70(5), pages 2619-2636, September.
    4. Kinshuk Jerath & Sang-Hyun Kim & Robert Swinney, 2017. "Product Quality in a Distribution Channel with Inventory Risk," Marketing Science, INFORMS, vol. 36(5), pages 747-761, September.
    5. Li, Qiyang, 2025. "Buying from a rival: The effect of knowledge sharing, co-opetition and signal inference," Transportation Research Part E: Logistics and Transportation Review, Elsevier, vol. 201(C).
    6. Tao Lu & Ying‐Ju Chen & Brian Tomlin & Yimin Wang, 2019. "Selling Co‐Products through a Distributor: The Impact on Product Line Design," Production and Operations Management, Production and Operations Management Society, vol. 28(4), pages 1010-1032, April.
    7. Li, Mengfan & Hong, Zhaofu & Guo, Xiaolong & Yu, Yugang, 2025. "Green design and information sharing in a horizontally competitive supply chain," Transportation Research Part E: Logistics and Transportation Review, Elsevier, vol. 194(C).
    8. Brian Mittendorf & Jiwoong Shin & Dae-Hee Yoon, 2013. "Manufacturer marketing initiatives and retailer information sharing," Quantitative Marketing and Economics (QME), Springer, vol. 11(2), pages 263-287, June.
    9. Brian Mittendorf & Jiwoong Shin & Dae-Hee Yoon, 2013. "Manufacturer marketing initiatives and retailer information sharing," Quantitative Marketing and Economics (QME), Springer, vol. 11(2), pages 263-287, June.
    10. Wong, Hartanto & Lesmono, Dharma & Chhajed, Dilip & Kim, Kilsun, 2019. "On the evaluation of commonality strategy in product line design: The effect of valuation change and distribution channel structure," Omega, Elsevier, vol. 83(C), pages 14-25.
    11. Du, Ningning & Yan, Yingchen & Qin, Zhongfeng, 2025. "Retailer financing: On the dual advantages of profit and information transparency," Transportation Research Part E: Logistics and Transportation Review, Elsevier, vol. 194(C).
    12. Zhong, Qinjia & Wang, Jianjun & Zou, Zongbao & Lai, Xiaofan, 2023. "The incentives for information sharing in online retail platforms," Transportation Research Part E: Logistics and Transportation Review, Elsevier, vol. 172(C).
    13. Baojun Jiang & Lin Tian & Yifan Xu & Fuqiang Zhang, 2016. "To Share or Not to Share: Demand Forecast Sharing in a Distribution Channel," Marketing Science, INFORMS, vol. 35(5), pages 800-809, September.
    14. Zhang, Chu & Liu, Bin & Cai, Gangshu George & Huang, Tao, 2023. "When ignorance is bliss: The retailer’s intelligence hazard under information sharing and exchanging," Transportation Research Part E: Logistics and Transportation Review, Elsevier, vol. 180(C).
    15. Tao Lu & Ying-Ju Chen & Jan C. Fransoo & Chung-Yee Lee, 2020. "Shipping to Heterogeneous Customers with Competing Carriers," Manufacturing & Service Operations Management, INFORMS, vol. 22(4), pages 850-867, July.
    16. Lin, Xiaogang & Chen, Ying-Ju & Xiong, Hui, 2024. "Manufacturers’ efforts and platform’s demand information sharing in eco-friendly actions," Transportation Research Part E: Logistics and Transportation Review, Elsevier, vol. 192(C).
    17. Maher Agi & Xinghao Yan, 2020. "Greening products in a supply chain under market segmentation and different channel power structures," Post-Print hal-02898158, HAL.
    18. Guo Li & Lin Tian & Hong Zheng, 2021. "Information Sharing in an Online Marketplace with Co‐opetitive Sellers," Production and Operations Management, Production and Operations Management Society, vol. 30(10), pages 3713-3734, October.
    19. Guan, Xu & Huang, Song & Chen, Ying-Ju, 2022. "Acquisition transparency and induced supplier encroachment," Omega, Elsevier, vol. 108(C).
    20. 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.

    More about this item

    Keywords

    ;
    ;
    ;

    Statistics

    Access and download statistics

    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:inm:ormnsc:v:70:y:2024:i:3:p:1428-1447. 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: Chris Asher (email available below). General contact details of provider: https://edirc.repec.org/data/inforea.html .

    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.