Cooperative Pricing Under Forecasting Sharing in the Manufacturer-E-Retailer Supply Chain

Abstract

With the rapid development of the Internet, many retailers and individuals nowadays use this technology to engage in direct e-retailing sales. In this article, we investigate the value of demand-forecast information sharing in a manufacturer-e-retailer supply chain. The value of market information depends not only on its accuracy, but also on the e-retailer’s market power and the product’s Web compatibility. We develop a theoretical approach to examine the value of information sharing for the manufacturer and the e-retailer first, and then we further check to see how information sharing is moderated by the e-retailer’s market share and the product’s e-market-base demand. Our results suggest that under some conditions, both the manufacturer and the e-retailer can be better off from information sharing. Especially when the e-retailer’s market share is larger and the product’s e-market-base demand is higher, information sharing is more valuable for the supply chain players. Using our analysis findings, we indicate marketing strategies that the manufacturer and the e-retailer may want to adopt.