Information sharing format and carbon emission abatement in a supply chain with competition

Abstract

This paper aims to investigate the interaction between information management and operational management and a retailer’s ability of truthful information sharing, considering government environmental policies and public eco-friendly awareness. Under cap-and-trade regulation, we analyse different information sharing formats (no information sharing, partial information sharing, and public information sharing) among a supply chain comprised of one manufacturer, one incumbent retailer with private demand information, and an uninformed entrant retailer. The result shows that the incumbent retailer’s decision on information sharing format and the ability of truthful information are significantly affected by the manufacturer’s capability in abating carbon emissions and the demand uncertainty. In partial information sharing scenario, a babbling equilibrium dominates an informative equilibrium. In public information sharing scenario, the incumbent retailer is able to share truthful information under a sequential-move. Moreover, we examine the impacts of public information sharing on every member’s profit. The results show that public information sharing benefits the incumbent retailer when the demand uncertainty is relatively small. The manufacturer always benefit from public information sharing. Consequently, to obtain the benefits of information sharing, the manufacturer should make effort to improve carbon emission abatement capacity.