Information sharing for competing manufacturers: The strategic analysis of environmental innovation

Abstract

This paper aims to study the strategic effects of manufacturers' environmental innovation on supply chain information sharing. We develop a game-theoretic model including two manufacturers and one retailer who possesses superior demand information, and mainly investigate two cases that one or both of the manufacturers conduct environmental innovation (i.e., cases O or T). Our analysis shows that after the manufacturers conduct environmental innovation, the retailer may fully or partially share demand information for free. Moreover, the retailer is more willing to share information voluntarily in case T, comparing to case O. If manufacturers' competition is more intense, the retailer is more (less) likely to share information fully in case O (case T). Under certain conditions, the retailer can be incentivized to share information through designing a side payment from manufacturers. In addition, the side payment from one of the manufacturers can benefit the rival and supply chain in most cases, but there are exceptions. After providing incentives, non-information sharing is less likely to occur in case T, comparing to case O. Besides, the retailer's preferred modes of information sharing cannot benefit both manufacturers simultaneously in case O, but it can in case T. Our main conclusions are still valid when considering carbon tax which can facilitate information sharing.