Supply chains competition with vertical and horizontal information sharing

Abstract

This paper studies the incentive for vertical and horizontal information sharing in two competing supply chains with uncertain demand. Retailers obtain the uncertain demand information from the market, and can exchange the private information with each other. We investigate the equilibrium information sharing arrangement in the competing supply chains and discuss how expected payoffs of the firms and the supply chains is impacted by horizontal information sharing. The results show that no vertical information sharing in both supply chains is the unique equilibrium in one-shot game, and horizontal information sharing won't affect the vertical information sharing strategy for the competing supply chains. However, horizontal information sharing will increase the supply chain profits if the competition between two supply chains is sufficiently less intense. Furthermore, we analyse the conditions of prisoner's dilemma for the equilibrium information sharing arrangement and the perfect Nash equilibrium of the repeated game. [