Information Acquisition in Vertical Relations

Abstract We analyse a simple supply chain with one supplier, one retailer and uncertainty about market demand. Focusing on the incentives of the supplier and the retailer to enhance their private information about the actual market conditions, we show that choices on information acquisition are strategic complements. While the retailer’s incentives are mainly driven by the information rent that he can earn, the supplier will choose to acquire information only if the retailer is rather well informed, even though the information is free of charge.

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The Incentive Model in Supply Chain with Trade Credit and Default Risk

Complexity ◽

10.1155/2019/5909785 ◽

2019 ◽

Vol 2019 ◽

pp. 1-11

Author(s):

Hong Cheng ◽

Yingsheng Su ◽

Jinjiang Yan ◽

Xianyu Wang ◽

Mingyang Li

Keyword(s):

Supply Chain ◽

Asymmetric Information ◽

Moral Hazard ◽

Private Information ◽

Default Risk ◽

Trade Credit ◽

Uncertain Demand ◽

Market Demand ◽

Incentive Contract ◽

Risk Neutral

Trade credit is widely used for its advantages. However, trade credit also brings default risk to the manufacturer due to the uncertain demand. And moral hazard may aggravate the default risk. The purpose of this paper is to investigate the role of moral hazard in trade credit and explore incentive contract under uncertain demand and asymmetric information. We consider a two-echelon supply chain consisting of a risk-neutral retailer ordering a single product from a risk-neutral manufacturer. Market demand is stochastic and is influenced by retailer’s sales effort which is his private information. Incentive theory is used to develop the principal-agent model and get the incentive contract from the manufacturer’s perspective. Results show that the retailer will reduce his effort level to get more profit and the manufacturer’s profit will be reduced, in the case of asymmetric information. Facing this result, the manufacturer will reduce the order quantity in incentive contract to lessen his losses. Numerical examples are provided to illustrate all these theoretical results and to draw managerial insights.

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Information sharing and leakage in the two-echelon supply chain

RAIRO - Operations Research ◽

10.1051/ro/2019066 ◽

2019 ◽

Author(s):

Jingru Wang ◽

Zhiyuan Zhen ◽

Qiang Yan

Keyword(s):

Supply Chain ◽

Information Sharing ◽

Information Acquisition ◽

Information Leakage ◽

High Signal ◽

Market Demand ◽

Retail Competition ◽

Ex Post ◽

Private Signals ◽

Demand Information

We consider ex post demand information sharing and leakage in a two-echelon supply chain consisting of one supplier and two retailers competing in quantities. The incumbent retailer has an advantage to acquire information about the market at a cost. If he invests in information acquisition, he privately acquires a signal about the market demand. We examine the incumbent’s incentive of information acquisition and sharing, and the upstream supplier’s information leakage strategy. We confirm that the incumbent’s information acquisition and sharing decisions depend on whether the information acquisition is observable. When it is observable, the incumbent fully shares his private signals even though the shared high signal may hurt him. However, when it is unobservable, the incumbent can share the favorable signal (low signal) and withhold the unfavorable signal (high signal). Moreover, we also find that the supplier will always leak the signal to the entrant no matter what signal she acquires. In addition, we demonstrate under the information sharing and leakage strategy, it may benefit the whole supply chain when the retail competition intensity is not very large.

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Incentive Strategies for Low-Carbon Supply Chains with Asymmetric Information of Carbon Reduction Efficiency

International Journal of Environmental Research and Public Health ◽

10.3390/ijerph15122736 ◽

2018 ◽

Vol 15 (12) ◽

pp. 2736 ◽

Cited By ~ 2

Author(s):

Qinpeng Wang ◽

Longfei He

Keyword(s):

Supply Chain ◽

Private Information ◽

High Efficiency ◽

Low Carbon ◽

Carbon Reduction ◽

Carbon Supply ◽

Reduction Efficiency ◽

Information Rent ◽

Low Efficiency ◽

The Impact

Information concerning carbon reduction efficiency is of great significance to supply chain operations. Considering the impact of information asymmetry on the performance of low-carbon supply chain, we therefore analyze a chain system with a single product designer and a single manufacturer. The manufacturer owns information on carbon reduction efficiency, whereas the product designer only knows that the carbon reduction efficiency of the manufacturer is either high or low. To induce the manufacturer to reveal his true private information of carbon-reduction efficiency to the product designer, we devise the pooling and separating equilibrium models to compare the impacts of these two models on supply chain performance, respectively. We find that the high-efficiency manufacturer gets his first-best choice at the equilibrium decision in the separating model, and obtains the information rent in the pooling model. The information rent increases in the efficiency difference between the two emission-reduction types. Additionally, we examine how the probability of the high (or low)-efficiency manufacturer being chosen impacts on both the profits of chain members and carbon-reduction levels. The research provides a reference for companies about how to cooperate with partner who possess private information of carbon emissions.

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Mathematical analysis of the impact mechanism of information platform on agro-product supply chain and agro-product competitiveness

Open Physics ◽

10.1515/phys-2017-0012 ◽

2017 ◽

Vol 15 (1) ◽

pp. 108-120 ◽

Cited By ~ 4

Author(s):

Qi-Jie Jiang ◽

Mao-Zhu Jin ◽

Pei-Yu Ren

Keyword(s):

Mathematical Model ◽

Supply Chain ◽

Information Acquisition ◽

Bullwhip Effect ◽

Agricultural Products ◽

Operating Efficiency ◽

Market Demand ◽

Information Platform ◽

The Operating Mechanism ◽

The Impact

AbstractHow to optimize agro-product supply chain to promote its operating efficiency so as to enhance the competitiveness of regional agricultural products has posed a problem to academic circles, business circles and governments of various levels. One way to solve this problem is to introduce an information platform into the supply chain, which this essay focuses on. Firstly, a review of existing research findings concerning the agro-product competitiveness, agro-product supply chain (ASC) and information platform was given. Secondly, we constructed a mathematical model to analyze the impact of information platform on the bullwhip effect in ASC. Thirdly, another mathematical model was constructed to help compare and analyze the impact of information platform on information acquisition of members in ASC. The research results show that the implantation of information platform can mitigate the bullwhip effect in ASC, and members can determine order amount or production more close to the actual market demand. And also the information platform can reduce the time for members in ASC to get information from other members. Besides, information platform can help ASC to alleviate information asymmetry among upstream and downstream members. Furthermore, researches about the operating mechanism and pattern, technical feature and running structure of the information platform, along with their impacts on agro-product supply chain and the competitiveness of agricultural products need to be advanced.

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Designing a Revenue Sharing Contract under Information Asymmetry

International Journal of Mathematical Engineering and Management Sciences ◽

10.33889/ijmems.2020.5.5.064 ◽

2020 ◽

Vol 5 (5) ◽

pp. 820-834

Author(s):

Jaimini Bhattacharyya ◽

Rahul R. Marathe ◽

G. Srinivasan

Keyword(s):

Supply Chain ◽

Laboratory Experiment ◽

Private Information ◽

Simulation Experiment ◽

Revenue Sharing ◽

Market Demand ◽

Order Quantity ◽

Sales Revenue ◽

Revenue Sharing Contract ◽

The Impact

In a supply chain coordinated by a revenue sharing contract, under-reporting of sales revenue has been a common practice amongst retailers who always have private information about the market demand. In this article, we aim to design a mechanism to mitigate this problem. One may design a contract to elicit truthful information from the retailer while maximizing supplier’s payoff. However, we find that such contracts fail to coordinate the supply chain, when the market demand is high. Hence, we study an audit-based revenue sharing contract. First, we design a laboratory experiment to investigate the impact of retailer’s decisions on the subsequent choices made by the supplier. We find that the audit probability chosen by the supplier increases with the gap between retailer’s order quantity and the sales reported by the retailer. We follow this up with a simulation experiment which incorporates the findings of our laboratory experiment. Audit cost and the penalty announced by the supplier for not reporting true sales turned out to be important in making decisions for both the players. We also find the threshold auditing cost beyond which auditing is not economically viable for the supplier.

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