Public versus private information: The impact of quality information sharing on competition under different channel structures

Abstract

While prior research studied the impact of information sharing on competition in the supply chain assumes suppliers adopt same selling channels, we contribute to this research by analyzing public and private information sharing under three types of supply chain structures. This paper considers two scenarios including public–public information sharing and public–private information sharing. In each scenario, competing suppliers can sell products in one of three types of supply chain structures including indirect–direct channel structure, indirect–indirect channel structure, and direct–direct channel structure. Using a game-theoretic framework, we get the profits of suppliers under two scenarios and compare the expected profits under different scenarios to analyze the impact of public information sharing and private information sharing on the competition. By comparing the profits of suppliers under different channel structures, we get the existence conditions of each channel structure. We show our key findings as follows. Interestingly, we find that public information sharing enhances supply chain competition and conversely, private information sharing mitigates supply chain competition. This finding suggests that suppliers can use private information sharing as a tool to increase competitive capability in channel competition. We also find that the supplier with low-quality products is willing to share private quality information when the products’ quality difference is low. A surprising finding is that private information sharing achieves a win–lose outcome, where one supplier earns a higher profit compared to public information sharing whereas another supplier earns a lower profit. In addition, only under the public–private information sharing scenario can suppliers adopt the indirect–direct channel structure.