This study examines a retailer’s decision to share market demand information in a supply chain wherein a supplier sells a product with a certain level of quality to a retailer, who then resells it to the end consumer. It also considers whether a supplier should establish a direct selling channel by incurring a fixed entry cost to compete with the retail channel. Although conventional wisdom indicates that a retailer may voluntarily disclose information under ex-ante supplier encroachment, our results show how and why a retailer may share information with the supplier who encroaches on the retail market with a decision on quality. Specifically, our findings reveal that information sharing is beneficial to the retailer when the quality cost coefficient is low and entry cost is relatively low, even under encroachment by the supplier. Moreover, the retailer may prefer to disclose demand information to the supplier if the quality cost coefficient is low, even when the entry cost is high, under non-encroachment. Interestingly, we found that the supplier prefers to encroach if the retailer shares demand information when the entry cost is moderate. Further, we found that the retailer has a higher incentive to share information under supplier encroachment compared with non-encroachment. These results are in sharp contrast with the extant literature.
Keywords: Game theory, information sharing, quality decision, supplier encroachment
@article{RO_2022__56_1_145_0,
author = {Hou, Rui and Li, Weijian and Lin, Xiaogang and Zhao, You},
title = {Impact of quality decisions on information sharing with supplier encroachment},
journal = {RAIRO. Operations Research},
pages = {145--164},
year = {2022},
publisher = {EDP-Sciences},
volume = {56},
number = {1},
doi = {10.1051/ro/2021184},
mrnumber = {4376281},
language = {en},
url = {https://www.numdam.org/articles/10.1051/ro/2021184/}
}
TY - JOUR AU - Hou, Rui AU - Li, Weijian AU - Lin, Xiaogang AU - Zhao, You TI - Impact of quality decisions on information sharing with supplier encroachment JO - RAIRO. Operations Research PY - 2022 SP - 145 EP - 164 VL - 56 IS - 1 PB - EDP-Sciences UR - https://www.numdam.org/articles/10.1051/ro/2021184/ DO - 10.1051/ro/2021184 LA - en ID - RO_2022__56_1_145_0 ER -
%0 Journal Article %A Hou, Rui %A Li, Weijian %A Lin, Xiaogang %A Zhao, You %T Impact of quality decisions on information sharing with supplier encroachment %J RAIRO. Operations Research %D 2022 %P 145-164 %V 56 %N 1 %I EDP-Sciences %U https://www.numdam.org/articles/10.1051/ro/2021184/ %R 10.1051/ro/2021184 %G en %F RO_2022__56_1_145_0
Hou, Rui; Li, Weijian; Lin, Xiaogang; Zhao, You. Impact of quality decisions on information sharing with supplier encroachment. RAIRO. Operations Research, Tome 56 (2022) no. 1, pp. 145-164. doi: 10.1051/ro/2021184
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