Sharing demand information in competing supply chains with greening efforts

Area of Science:

• Operations Research
• Supply Chain Management
• Game Theory

Background:

• Retailers possess private demand information, while manufacturers invest in greening efforts.
• Previous research suggests information sharing may reduce consumer surplus and social welfare.

Purpose of the Study:

• To analyze manufacturer greening decisions under demand information sharing in a supply chain model.
• To examine the impact of competition modes (Cournot and Bertrand) on greening decisions and outcomes.
• To investigate the effects of information sharing on greening levels, wholesale prices, consumer surplus, and social welfare.

Main Methods:

• Development of a supply chain model with one manufacturer and one retailer.
• Extension to a duopoly model with two competing supply chains.
• Application of game theory to analyze equilibrium outcomes under Cournot (quantity) and Bertrand (price) competition.

Main Results:

• Information sharing improves the greening level but can lead to upward distortion of wholesale prices.
• Information sharing is more likely when manufacturers are efficient in greening.
• Bertrand competition with information sharing results in higher equilibrium greening levels compared to Cournot competition.
• Consumer surplus and social welfare can increase under Bertrand competition with information sharing, particularly with intense competition.

Conclusions:

• The mode of competition significantly influences the impact of information sharing on supply chain greening.
• Contrary to prior literature, information sharing under intense Bertrand competition can enhance consumer surplus and social welfare.
• This study offers novel insights into optimizing greening efforts through information sharing strategies tailored to competition dynamics.