Private Demand Information Research Articles

Manufacturers’ efforts and platform’s demand information sharing in eco-friendly actions

More and more consumers have an awareness of environmental protection, and platforms and manufacturers invest in eco-friendly operating and manufacturing to stimulate demand and fulfill their social responsibilities. Our paper investigates whether the platform should share her private demand information with two manufacturers in the reselling or agency selling. The manufacturers offer consumers two substitutable products through the platform. By incorporating eco-friendly efforts into our game-theoretic model, we show that information sharing always benefits manufacturers when the platform serves as a reseller. However, hiding information is preferable for the platform, considering the low efficiency of eco-friendly investment. For the platform, she is willing to disclose information to one or both manufacturers with relatively high efficiency. Nevertheless, the platform is willing to disclose information to both manufacturers (only one manufacturer) when the efficiency is low (high) in the agency selling. Moreover, when manufacturers compete more intensely on eco-friendly levels, the platform is more likely to disclose information to one or both manufacturers in the reselling, but more intense competition for eco-friendly levels prevents the platform from disclosing information to more manufacturers in the agency selling. Furthermore, both manufacturers’ eco-friendly levels always respond positively to the demand signal. Finally, we consider the disparity in carbon emissions between green and non-green manufacturers in the extension. We find that disclosing the demand information to both manufacturers is more efficient in reducing carbon emissions than sharing with only one manufacturer.

Retailer Information Sharing With Upstream Product Line Flexibility

With the rise of the digital economy, many firms are enhancing product line flexibility (i.e., the ability to adjust product line length or depth) to better manage demand uncertainties brought about by disruptive technologies. Concurrently, the booming digital economy has widened the information gap in supply chains. Retailers/platforms can now gather more detailed data to predict demand, but such data remains unavailable to manufacturers. This article studies how a manufacturer’s product line flexibility influences a retailer’s incentive to voluntarily share private demand information. We show that upstream product line flexibility encourages a retailer to voluntarily share information when product substitutability is low and the product line extension fee is moderate. This insight challenges the conventional belief that retailers should keep demand information private to maintain an advantage over manufacturers. Our work is the first to suggest that upstream product line flexibility can significantly motivate retailer information sharing. Additionally, we show that, although a social planner might prefer to withhold demand information from the manufacturer in the absence of product line flexibility, sharing this information becomes preferable when the manufacturer can adjust the product line length. The retailer’s decision on information sharing can align with the social planner’s in such scenarios. Furthermore, we demonstrate that, given upstream product line flexibility, except when product substitutability is not sufficiently high and the product line extension fee is moderate, the retailer’s information sharing decision is unaffected by whether the manufacturer determines the product line design before or after demand is realized and shared accordingly.

Manufacturer’s Channel Strategy and Demand Information Sharing in a Retailer-Led Green Supply Chain

In the rapidly evolving landscape of e-commerce, companies are increasingly focusing on their channel strategies to gain sustainable development. However, asymmetric demand information poses challenges to these decisions. This paper explores the interplay between a retailer’s information sharing strategy and a manufacturer’s channel strategy in a retailer-led green supply chain, where the manufacturer may establish an online channel to sell its green products directly. The dominant retailer has private demand information about the market and decides whether to share private information with the manufacturer. By establishing a game model, we analyze the impacts of information sharing and the manufacturer’s channel strategy on the payoffs for all the supply chain members, considering sustainability aspects such as the environmental benefits of green products and the efficiency of supply chain operations. The results show that information sharing benefits both the retailer and the manufacturer, irrespective of the establishment of an online channel. When the retailer shares demand information, opening an online channel benefits the manufacturer but benefits the retailer under certain conditions. Furthermore, through a numerical approach, we examine the strategic preferences of the firms and derive the equilibrium strategy. Interestingly, the manufacturer consistently prefers the scenario involving both an online channel and information sharing. The retailer’s preference, however, depends on the direct selling cost; it favors information sharing with or without an online channel based on this cost. Ultimately, our findings suggest that the equilibrium strategy can either be sharing information with an online channel or not sharing information without an online channel, which is contingent upon the direct selling cost and the forecast signal precision. These insights provide actionable strategies for enhancing the sustainability of supply chain operations.

Information Sharing Between Competitors With Endogenous Production Timing

We study two competing firms’ incentives for demand information sharing and their production timing strategies. One firm adopts routine timing, where her production time is fixed according to her previous product models’ manufacturing time. The other firm uses strategic timing, where his production time can be strategically chosen to occur before, concurrently with, or after that of the routine-timing firm. The firms decide whether to disclose their private demand information and make quantity decisions based on the available demand information, either simultaneously or sequentially. We analyze the optimal production timing decisions for the strategic firm under different information sharing scenarios and find that a pre-emptive move is generally not optimal. We demonstrate that endogenous production timing can create incentives for information sharing and characterize the conditions under which both firms share information, one firm shares information, or neither firm shares information. Additionally, we uncover several interesting implications of information sharing under endogenous production timing: firms are more likely to share information in intensified competition, a firm may benefit from its rival’s superior information capability, and the option of information sharing enhances social welfare, which may also benefit from more intense competition.

Supply chain contract design considering carbon tax policy under demand information asymmetry

AbstractOur paper constructs a low‐carbon supply chain (LSC) with a single manufacturer producing low‐carbon products and a single retailer. Assume that the retailer possesses private demand information and consider two cases: The manufacturer or the retailer determines the low‐carbon product's retail price. By constructing principal‐agent models, we obtain the optimal menu of contracts in each case. The impacts of the carbon tax rate and information asymmetry on LSC members' equilibrium solutions and expected profits are discussed. The results show that, given certain conditions, both the LSC members may obtain more expected profits under information asymmetry by introducing appropriate contracts.

To be traceable and responsive: blockchain adoption and information sharing in a fresh produce supply chain

AbstractThis study targets a fresh produce supply chain that includes a retailer owning private demand information, a supplier who may adopt blockchain, and a 3PL (Third Party Logistics) engaging in freshness keeping. By developing a multi‐stage game model, we study the blockchain adoption strategy and the information‐sharing strategy considering information transmission between the 3PL and the supplier and analyze the interaction of these strategies. We find that under the case of moderate blockchain cost, the retailer could encourage the supplier to adopt blockchain by sharing information strategically. In that case, the retailer would actively share with the supplier and the 3PL for fresh produce with low freshness sensitivity and serious consumer distrust. Otherwise, due to the dominant impact of information transmission, the retailer has to keep private information if consumers are less concerned about freshness, while it has to share information if consumers are more concerned about freshness.

Games of supplier encroachment channel selection and e‐tailer's information sharing

We consider an e‐tailer's upstream supplier who wants to encroach into retailing to earn additional revenue. The supplier needs to decide whether or not to enter the retail market by either selling to consumers on the e‐tailer's platform by paying commission fees (agency encroachment) or opening an independent online/offline retail store (direct encroachment). The e‐tailer has private demand information and decides whether or not to share it with the supplier. Two leadership scenarios—the supplier‐leads (i.e., the supplier selects the channel before the e‐tailer decides whether to share information) and the e‐tailer‐leads (i.e., the supplier selects the channel after the e‐tailer decides whether to share information)—are examined. Our main findings are as follows. First, we show that the e‐tailer has no incentive to share information under no encroachment and direct encroachment. Interestingly, this result holds in both leadership scenarios. Second, a medium commission rate gives rise to an equilibrium of agency encroachment with information sharing by the e‐tailer. This equilibrium is more likely to sustain in the supplier‐leads scenario than in the e‐tailer‐leads scenario. Third, agency encroachment brings the supplier the highest sales volume (at retail in the encroaching channel plus on wholesale to the e‐tailer) when the two parties compete in quantity while direct encroachment does so for a price competition. Fourth, supplier encroachment always improves consumer surplus, but it is not necessarily welfare‐improving. Last, we find that the e‐tailer is more willing to share information to induce the supplier to encroach through his agency channel if he has a significant selling cost advantage over the supplier or can endogenously determine the commission rate.

Information transparency and business mode selection in online platforms under manufacturer competition

In this study, we investigate the interaction between an online platform’s information sharing strategy and its business mode choice in a supply chain with two competing manufacturers both selling through a common online platform under demand uncertainty. The online platform possesses private demand information and arranges with each manufacturer either a reselling mode (R) or an agency mode (A). We find that the online platform prefers not to share information in the RR mode, but prefers to do so with manufacturers that adopt the agency mode in the AA and AR/RA modes. Interestingly, in the AA mode, the online platform prefers to share information with only one manufacturer, rather than both, depending on the level of upstream competition. Counter-intuitively, although both manufacturers always benefit from information sharing, they do not always prefer to possess an information advantage over their competitor, especially when the competitors adopt the reselling mode. Furthermore, we find that the impact of information sharing on business mode choice depends on the level of upstream competition, commission rate and the information value. The transparency generated by the platform’s information sharing will enhance the probability of the AA and AR modes being adopted. Our findings can provide important managerial implications for the differentiated information sharing strategies of online platforms such Amazon and Tmall.

Allocating scarce resources in the presence of private information and heterogeneous favoritism

Motivated by the challenge of allocating scarce resources from the federal government to different states during the COVID‐19 pandemic, this paper studies optimal schemes for allocating scarce resources to agents with private demand information under different favoritism structures. Through an investigation of a mechanism design model that aims to induce agents to report their demands truthfully, we find the following results. First, when the principal purely cares about social welfare and when the principal has sufficient resources to satisfy all agents' demands, we find that the optimal allocation scheme is efficient in the sense that it is identical to the optimal scheme for the “benchmark” case when favoritism differentials and information asymmetry are both absent. Second, when rationing is needed due to resource scarcity, we show that heterogeneity in “event‐independent” favoritism across agents will cause the principal to allocate more resources to agents with larger favoritism and less resources to others, resulting in inefficient allocations. Third, when agents possess heterogeneous “event‐specific” favoritism due to the existence of outside options, the resulting allocation may boost all agents' expected utilities, including those agents who do not have any outside option. Finally, we show that the “allocation distortion” caused by both information asymmetry and heterogeneous favoritism can be reduced when “positive externality” is present (i.e., allocating resources to one agent can benefit other agents).

Recycling Strategies in a Collector-Led Remanufacturing Supply Chain under Blockchain and Uncertain Demand

Remanufacturing has been regarded as a key to the sustainable development of enterprises. However, collection strategies affect the remanufacturing and recycling of used products. Blockchain can ensure the authenticity of disclosed information and improve the consumer’s trust in remanufactured products. Inspired by this, this paper develops a game-theoretic model to examine the selection of different recycling strategies in the remanufacturing supply chain considering blockchain adoption and uncertain demand. Incumbent collector 1 provides the manufacturer with used product 1 for remanufacturing product 1. For product 2, the manufacturer has two different collection strategies: in-house collection by the manufacturer or external collection by collector 2. The collectors act as the channel leader, and the manufacturer, who has private demand information, is the follower. Results show that collectors are incentivized to participate in the blockchain. If there is no blockchain, collector 1 prefers external collection. In the case of blockchain, the manufacturer prefers external collection when the demand variance is low. The manufacturer’s decision on the in-house collection and external collection depends on the coefficient of collection investment costs.

Cooperation Mode Selection and Information Sharing in a Fresh Produce Supply Chain With Freshness-Keeping Effort

ABSTRACT This article considers a fresh produce supply chain where the supplier provides freshness-keeping effort and the e-commerce platform owns private demand information. The supplier can choose to cooperate with the platform in reselling or agency selling mode, and the platform can choose whether to share information. Considering that demand is affected mainly by freshness and price, we model a multistage game and explore the supplier’s cooperation mode choice and the platform’s information sharing strategy. We reveal that the supplier should consider scale economics while investing in freshness-keeping resources. The platform should be cautious in setting the commission fee because she does not always benefit from the increased commission rate. We also show that the platform may benefit or suffer from information sharing, depending on the freshness sensitivity and the cooperation mode choice. As information sharing benefits responsive decision making, we reveal that the supplier may choose agency selling to induce information sharing even at a high commission rate. We also find that the interaction between cooperation mode selection and information sharing may lead to a win–win or lose–lose equilibrium strategy. Specifically, the supplier and the platform may achieve win–win cooperation under agency selling (reselling) at a low (high) commission rate. Then, to improve supply-chain performance, we design incentive contracts to motivate information sharing and adjust the cooperation mode choice. After the strategy adjustment, we find that the supplier may adopt a strategy of high quality with a low price under agency selling.

How reverse information sharing supports pricing and sales effort decisions: Signaling game-based incentive mechanism design

The importance of information sharing in a supply chain (SC) is well known. However, how it could be used as an instrument to affect decisions on pricing and sales effort remains uncertain. Based on the investigation of apparel industry, this study formulates a signaling game and uses it to examine the impact of information sharing on operational decisions of a SC that involves a supplier who possesses private demand information and a retailer who promotes sales, where two information-sharing strategies are considered: Mandatory information-sharing (MS) and no information-sharing (NS). Under MS strategy, the supplier actively shares demand information with the retailer. The traditional Stackelberg game is studied. Backward induction is used to obtain the equilibrium solutions and ex ante expected profits. Under NS strategy, the dynamic game evolves to the signaling game. The supplier’s mimicking mechanism is investigated considering the conflicting impacts of the retail price and sales effort. Furthermore, we examine the separating equilibrium and pooling equilibrium. The intuitive criterion is used to refine the multiple equilibria. At last, the SC members’ preferences on information sharing strategies are analyzed.

Demand information acquisition strategy in a dual channel supply chain

AbstractThis article examines the information acquisition strategy of a dual‐channel supply chain, in which a manufacturer sells a product both through a retailer and through its own direct channel. Either the manufacturer or the retailer can acquire demand information from a third‐party marketing research company. The manufacturer first decides whether or not to acquire such information, and then the retailer decides whether or not to acquire information. This setup implies a signaling game (either the manufacturer or the retailer may have private demand information) with an endogenous information structure. We identify conditions under which neither of the firms will acquire demand information, even when the cost of implementation is negligible. We also show that information acquisition can have a negative impact on the retailer, the supply chain, customers, and society. The manufacturer who acquires information always prefers to share information with the retailer, which benefits the retailer. The retailer who acquires information, however, may not want to share information with the manufacturer. The managerial insight of our paper is that firms that have more accurate demand data must develop strategies for the appropriate use of that information, both in their own planning and within the context of their dual‐channel supply chain.

Strategic inventory and supplier encroachment under asymmetric information

The existing literature has shown that using a strategic inventory strategy and supplier encroachment strategy exclusively or simultaneously may improve the efficiency of the supply chain. However, most research assumes that the demand information in the supply chain is symmetric. In real life, the retailer often has private demand information, and thus the demand information is asymmetric. The role of an information sharing strategy in the presence of strategic inventory and supplier encroachment has yet to be studied. The gap is filled by considering a two-period model consisting of a supplier and a retailer, for which information sharing, strategic inventory, and supplier encroachment are investigated with a focus on the effect of strategic inventory strategy on information sharing strategy, encroachment strategy, and the profit of supply chain members. We significantly contributed by considering the interaction between the retailer's strategic inventory strategy, information sharing strategy, and the supplier's encroachment strategy. Asymmetric information is first introduced in the strategic inventory model. Furthermore, our other significant contribution is presented to demonstrate that strategic inventory can hurt all firms when the demand information is asymmetric, which is different from the setting of perfect information. The following results are obtained. First, holding strategic inventory will not affect the retailer's information sharing strategy. Second, the use of strategic inventory by the retailer will restrain the use of encroachment strategy by the supplier, whether the information is shared or not. Finally, when the demand information is asymmetric, and the supplier does not encroach in the second period, the retailer can use strategic inventory to bring about 'lose-lose' or 'win-lose' outcomes besides 'win-win' or 'lose-win' outcomes.

Retailer's willingness to adopt blockchain technology based on private demand information

<p style='text-indent:20px;'>This paper considers a supply chain that includes one supplier and one retailer, in which the retailer has a more accurate demand forecast. The blockchain technology can verify the authenticity of the information, then the retailer can choose to truly share the demand information with the supplier by adopting such a costly technology. We discuss three scenarios based on signaling game: the retailer bears all the cost (no subsidy), the supplier bears part of the cost by providing direct subsidy or wholesale discount, respectively. Specifically, in a demand information asymmetric setting, we mainly focus on exploring the conditions of retailer adopting blockchain technology and the supplier's subsidy strategy choice, and further verify the robustness of the model by considering the retailer's risk aversion or multiple suppliers. In all scenarios, we find that the retailer will apply threshold strategy to adopt blockchain technology. The retailer's willingness to adopt blockchain technology is negatively correlated with the corresponding adoption cost, the supplier's profit level, and positively correlated with the number of suppliers. Additionally, we find the supplier can profit from providing subsidies when the cost of adopting blockchain technology is around a medium level, and the direct subsidy is superior to wholesale discount. More surprisingly, we find subsidies may work to the disadvantage of the subsidized party. Specifically, compared to no subsidy, we find the direct subsidy and the wholesale discount can increase the retailer's willingness to adopt blockchain technology, but hurt the retailer's as well as the supply chain's profits.</p>

Inducing supplier backup via manufacturer information sharing under supply disruption risk

What comes along with the repeating and wide-range COVID-19 outbreak is the increasingly latent supply disruption risk encountered by global supply chains. Among many instruments to enhance supply chain resilience, backup production may be an appropriate choice, whereas how to induce the supplier backup becomes an obstacle. In this study, we investigate a supply chain in the context of the crisis-like new normal with supply disruption risk, wherein a manufacturer uses private demand information as a strategic lever, according to which a supplier decides whether to adopt backup production. Our findings reveal that the supplier’s equilibrium decision on the adoption of backup production exhibits a cutoff structure when the manufacturer shares demand information. Moreover, we uncover the effect of information sharing on backup decision. In specific, information sharing impedes the adoption of backup production under low demand potential while promoting it under high demand potential. Interestingly, the manufacturer may have the incentive to share the demand information with the upstream supplier if the demand variability is low and the backup cost is moderate, and such information sharing stimulates the supplier to adopt the backup production. Counterintuitively, the manufacturer and the whole supply chain may display nonmonotonic relations to the backup cost as a result.

Information structure selection in a green supply chain: Impacts of wholesale price and greenness level

We investigate a green supply chain (GSC) wherein the supplier sells green products to consumers through a retailer, who has information acquisition capability to acquire private demand information. We focus on three information structures: (i) no disclosure (i.e., the retailer never discloses the acquired demand information to the supplier); (ii) voluntary disclosure (i.e., the retailer can discretionarily disclose the acquired demand information to the supplier), and (iii) mandatory disclosure (i.e., the retailer must disclose the acquired demand information to the supplier). The GSC members’ equilibrium solutions and payoffs are examined under each information structure. The retailer's information disclosure strategies under voluntary disclosure are further analyzed. Finally, we identify GSC members’ best information structure option. The results show that the supplier always prefers mandatory disclosure, while the retailer's preference depends on the joint impact of the wholesale price and the greenness level on demand. When the joint impact is higher (lower) than a specific threshold, the retailer favors no disclosure (mandatory disclosure). Regardless of the joint impact faced by the retailer, voluntary disclosure is always a robust compromise, attractive to the retailer. Our research provides valuable insights and offers important decision support for the GSC members when deciding on the information structure.

Information Sharing in a Supply Chain with Asymmetric Competing Retailers

We study the information sharing in a supply chain of a manufacturer selling to two asymmetric retailers engaged in inventory competition. The dominant retailer has strong bargaining power and market power, which means that it enjoys a lower wholesale price and can obtain part of the unmet demand transferred from the weak retailer. The manufacturer offers a wholesale price to the weak retailer. As the weak retailer’s private demand information is unknown to the other participants, whether to share the information to other players become an important issue. We develop a game-theoretic model to examine four information-sharing formats: no information sharing, only sharing with the dominant retailer, only sharing with the manufacturer, and full information sharing. We obtain the equilibrium profits and decisions under the four sharing formats and investigate the firms’ preferences regarding these formats. We find that the weaker retailer prefers not sharing information and only sharing information with the dominant retailer formats, since these two formats lower the wholesale price and increase the weak retailer’s order quantity. The dominant retailer prefers full information sharing to only sharing with the dominant retailer because the former format increases the manufacturer’s wholesale price to the weaker retailer, thereby improving the dominant retailer’s total demand. This study also provides a theoretical basis for the application of advanced information technology in the supply chain.

Price decisions of freebie promotion with retailer information sharing

This study investigates two-echelon pricing game models in which a manufacturer provides freebies during a promotional period and a retailer considers whether to share private demand information with the manufacturer. In particular, the manufacturer produces products (e.g., high-end cosmetics) and sells them wholesale to the retailer during the regular selling period. During the promotional period, the manufacturer offers freebies as a means of gaining more profits. First, we investigate four pricing game models by considering the manufacturer’s and retailer’s different power structures under the condition that the manufacturer provides freebies. Then, numerical examples are used to comparatively analyze the equilibria in the different models. The results offer valuable managerial insights by performing a sensitivity analysis of three parameters, which are the relative length of the promotional period and a sensitivity coefficient and cost coefficient of the freebies.

Eliminate demand information disadvantage in a supplier encroachment supply chain with information acquisition

The retailer, who is closer to customers, usually has more information on demand than its manufacturer does. This paper focuses on a manufacturer's information acquisition strategy in a supply chain, and the design of the first-best contract to achieve a win-win for the manufacturer and its retailer. We consider a manufacturer encroachment supply chain in which the manufacturer sells products both directly to the consumer and indirectly through a retailer. The retailer has private demand information while the manufacturer has the option of acquiring demand information. The manufacturer sets the retail price in its direct channel, and the retailer sets the retail price in the retail channel. We consider the two retail price leadership cases, either the manufacturer decides the retail price first or the retailer decides the retail price first. We find that the manufacturer can be hurt by acquiring information, even when the cost is negligible, because competition between the two channels is intensified. Moreover, while one might expect that the retailer is better off from having more information, we show that the retailer can in fact benefit when the manufacturer acquires information. Lastly, we find that the retailer may be worse off from being the retail price leader when the manufacturer acquires demand information, and price competition can be intensified if more customers prefer the direct channel (indirect channel) when the manufacturer (the retailer) acts as the price leader.