Strategic demand information sharing in an e‐commerce supply chain: The effect of the supplier's pricing timing

Abstract

AbstractThe paper studies strategic demand information sharing on online retail platforms and explores how it is influenced by the wholesale pricing timing. The supplier sells the product under a wholesale price contract indirectly and by paying a proportional commission fee directly. We investigate both ex ante and ex post information sharing arrangements. Under each arrangement, the supplier needs to determine the sequence of the wholesale price setting and the information sharing stage. We find that (1) under ex ante information sharing, if the supplier sets the wholesale price before, the online platform always shares private information; otherwise, it prefers to share only when the commission fee is large. Interestingly, the online platform's information sharing incentive is independent of signal accuracy and market variability. (2) Under ex post information sharing, the online platform may manipulate the signal shared with the supplier. We characterize the conditions and influencing factors of truthful information sharing. (3) If the conditions for information sharing can be achieved, the supplier prefers to set the wholesale price later. Otherwise, the supplier sets the wholesale price before inducing the online platform to share information.