Vertical Information Sharing in a Volatile Market
(2008) In Marketing Science 27(3). p.513-530- Abstract
- When demand is uncertain, manufacturers and retailers often have private information on future demand, and such information asymmetry impacts strategic interaction in distribution channels. In this paper, we investigate a channel consisting of a manufacturer and a downstream retailer facing a product market characterized by short product life, uncertain demand, and price rigidity. Assuming the firms have asymmetric information about the demand volatility, we examine the potential benefits of sharing information and contracts that facilitate such cooperation. We conclude that under a wholesale price regime, information sharing might not improve channel profits when the retailer underestimates the demand volatility but the manufacturer does... (More)
- When demand is uncertain, manufacturers and retailers often have private information on future demand, and such information asymmetry impacts strategic interaction in distribution channels. In this paper, we investigate a channel consisting of a manufacturer and a downstream retailer facing a product market characterized by short product life, uncertain demand, and price rigidity. Assuming the firms have asymmetric information about the demand volatility, we examine the potential benefits of sharing information and contracts that facilitate such cooperation. We conclude that under a wholesale price regime, information sharing might not improve channel profits when the retailer underestimates the demand volatility but the manufacturer does not. Although information sharing is always beneficial under a two-part tariff regime, it is in general not sufficient to achieve sharing, and additional contractual arrangements are necessary. The contract types we consider to facilitate sharing are profit sharing and buyback contracts. (Less)
Please use this url to cite or link to this publication:
https://lup.lub.lu.se/record/1039062
- author
- He, Chuan ; Marklund, Johan LU and Vossen, Thomas
- organization
- publishing date
- 2008
- type
- Contribution to journal
- publication status
- published
- subject
- keywords
- channels of distribution, game theory, supply chains, decisions under uncertainty
- in
- Marketing Science
- volume
- 27
- issue
- 3
- pages
- 513 - 530
- publisher
- Informs
- external identifiers
-
- wos:000256832400014
- scopus:60849131777
- ISSN
- 0732-2399
- DOI
- 10.1287/mksc.1070.0312
- language
- English
- LU publication?
- yes
- id
- 28c22d20-a9d3-48ba-b8ca-2be2ab9ddb14 (old id 1039062)
- date added to LUP
- 2016-04-01 15:02:34
- date last changed
- 2023-01-04 08:12:05
@article{28c22d20-a9d3-48ba-b8ca-2be2ab9ddb14,
abstract = {{When demand is uncertain, manufacturers and retailers often have private information on future demand, and such information asymmetry impacts strategic interaction in distribution channels. In this paper, we investigate a channel consisting of a manufacturer and a downstream retailer facing a product market characterized by short product life, uncertain demand, and price rigidity. Assuming the firms have asymmetric information about the demand volatility, we examine the potential benefits of sharing information and contracts that facilitate such cooperation. We conclude that under a wholesale price regime, information sharing might not improve channel profits when the retailer underestimates the demand volatility but the manufacturer does not. Although information sharing is always beneficial under a two-part tariff regime, it is in general not sufficient to achieve sharing, and additional contractual arrangements are necessary. The contract types we consider to facilitate sharing are profit sharing and buyback contracts.}},
author = {{He, Chuan and Marklund, Johan and Vossen, Thomas}},
issn = {{0732-2399}},
keywords = {{channels of distribution; game theory; supply chains; decisions under uncertainty}},
language = {{eng}},
number = {{3}},
pages = {{513--530}},
publisher = {{Informs}},
series = {{Marketing Science}},
title = {{Vertical Information Sharing in a Volatile Market}},
url = {{http://dx.doi.org/10.1287/mksc.1070.0312}},
doi = {{10.1287/mksc.1070.0312}},
volume = {{27}},
year = {{2008}},
}