Platform Information Sharing Decisions Considering Supplier Delivery Services and Encroachment Strategies

Abstract

The platform often has private information about uncertain demand and determines whether to share the information with the supplier. And the supplier’s choice of delivery services and encroachment may depend on the platform’s information sharing policy. This paper examines the two-dimensional information sharing strategies in a supply chain where the supplier provides delivery services. Based on the game theory model, we find that when the platform shares unfavorable information, the motivation for the supplier’s encroachment decreases firstly. Encroachment does not reduce the level of delivery service from the supplier. Second, delivery services levels of supplier increase with channel substitution rate. Although platform sharing information lowers profits in a supply chain where the supplier provides delivery services, the platform can share information on behalf of delivery services improvement under certain conditions interestingly. Previous papers that ignore a supplier’s decision on delivery services may have underestimated the scope for platform profitable information sharing. Third, the equilibrium profits of supply chain entities present non-monotonous with respect to encroachment cost. The platform often faces a tradeoff. Sharing information, on the one hand, enables the supplier to gain a better understanding of the impact on demand and encourages enhancements to delivery services, which is advantageous to the platform. However, sharing information allows the supplier to absorb the impact of demand information by making modifications to the wholesale price and delivery services, which benefits the supplier but hurts the platform. This makes the negative effects of double marginalization worse.