Retailer information sharing with green manufacturer encroachment in a hybrid supply chain

Abstract

AbstractWe consider a hybrid supply chain with a manufacturer and an online retailer with rich demand information. The manufacturer invests in green products and sells them not only through retailers that then sell to customers (reselling) but also directly to consumers via retailers by paying a proportional fee (agency selling). The retailer first decides whether to share demand information with the manufacturer, who then decides whether to encroach. We show that a manufacturer is willing to encroach when the entry cost is small if the retailer chooses not to share information. However, with the increase in the entry cost, the manufacturer could still encroach if the retailer shares information. We also find that a manufacturer that is more efficient at producing green products is more likely to encroach. Moreover, when the entry cost is sufficiently small or large, the retailer prefers to share information with the manufacturer when the greening investment efficiency is high or the efficiency is low but the proportional fee is large. Nevertheless, when the entry cost is moderate and the competition intensity is small, sharing information is better for the retailer even if the efficiency is low and the proportional fee is small. Finally, we observe that consumer sensitivity to the direct channel, differences in agency selling price and direct selling price, and imperfect retailer information do not influence decisions in specific circumstances. Furthermore, adjusting the encroachment order or ex post sharing impacts the decision‐making, with the magnitude of impact depending on certain supply chain parameters.