Information Sharing in Competing Supply Chains with Carbon Emissions Reduction Incentives

Abstract

This paper investigates the incentives of firms to share demand information in two competing supply chains. We consider a model in which each supply chain consists of a manufacturer and a retailer, and the manufacturers decide their products’ carbon emissions reduction levels. Through information sharing, manufacturers can adjust their wholesale price and the level of carbon emissions reduction according to the demand signal. The results reveal that information sharing always benefits the manufacturer. Information-sharing arrangements are more likely to occur when the manufacturer’s carbon emissions reduction efficiency or the customer’s low-carbon product preference is relatively high. Moreover, under Cournot competition, the retailer’s incentive to share information increases when information is less accurate or the competition is less intense. By sharing demand information, manufacturers will invest more in reducing the carbon emissions of their products. Therefore, there are two effects of information sharing: the “economic effect” on the benefits of all parties and the “environmental effect” on reducing carbon emissions. Our findings highlight the economic and environmental incentives of information sharing in the supply chain and the synthesis impacts of low-carbon preferences, efficiency of carbon emissions reduction, and the competition intensity on the retailer’s incentives to share information.