Information sharing strategy for an incumbent retailer in a closed-loop supply chain

Abstract

This paper considers a closed-loop supply chain with a manufacturer, an incumbent retailer and an entrant retailer. The two retailers order the same products from the common manufacturer and then sell to consumers, and the incumbent retailer possesses private forecast information with respect to the uncertain demand. The incumbent retailer could strategically share its forecast information to make great profits. We find that, when the incumbent retailer shares the information with its upstream manufacturer, the entrant retailer benefits from this information sharing arrangement because of the information leakage effect. However, the incumbent retailer will be motived to share the information with the manufacturer only when the manufacturer is highly efficient in collection investment. To achieve information sharing, the research results show that, the manufacturer and the entrant retailer should pay the incumbent retailer for the demand information if the investment efficiency of the manufacturer meets certain conditions.