Information Sharing in a Supply Chain with Asymmetric Competing Retailers

We study the information sharing in a supply chain of a manufacturer selling to two asymmetric retailers engaged in inventory competition. The dominant retailer has strong bargaining power and market power, which means that it enjoys a lower wholesale price and can obtain part of the unmet demand transferred from the weak retailer. The manufacturer offers a wholesale price to the weak retailer. As the weak retailer’s private demand information is unknown to the other participants, whether to share the information to other players become an important issue. We develop a game-theoretic model to examine four information-sharing formats: no information sharing, only sharing with the dominant retailer, only sharing with the manufacturer, and full information sharing. We obtain the equilibrium profits and decisions under the four sharing formats and investigate the firms’ preferences regarding these formats. We find that the weaker retailer prefers not sharing information and only sharing information with the dominant retailer formats, since these two formats lower the wholesale price and increase the weak retailer’s order quantity. The dominant retailer prefers full information sharing to only sharing with the dominant retailer because the former format increases the manufacturer’s wholesale price to the weaker retailer, thereby improving the dominant retailer’s total demand. This study also provides a theoretical basis for the application of advanced information technology in the supply chain

Optimal Contract Design in Contract Farming under Asymmetric Effort Information

This paper studies the contract design, optimal financing, and pricing decision of the leading agricultural enterprise when the level of effort of the farmer is private information. We use buyer direct finance and add agricultural income insurance to transfer risks to overcome the farmer’s loan difficulty and contract default caused by information asymmetry. We design four kinds of contracts, including the uninsured and symmetric information contract (SN contract), the uninsured and asymmetric information contract (AN contract), the insured and symmetric information contract (SY contract), and the insured and asymmetric information contract (AY contract). Through comparative analysis of the different types of contracts, several results are obtained. First, when there is no insurance, supervision of the leading enterprise can improve the farmer’s level of effort; but supervision costs are incurred, and incentive contracts can avoid the farmer’s moral hazard. Second, agricultural income insurance improves the farmer’s level of effort when information is asymmetric, which transfers risks and saves costs for all the game participants. Third, the leading enterprise prefers an asymmetric information contract and the farmer prefers AN contract when the probability of loan repayment is high

Optimal Contract Design in Contract Farming under Asymmetric Effort Information

This paper studies the contract design, optimal financing, and pricing decision of the leading agricultural enterprise when the level of effort of the farmer is private information. We use buyer direct finance and add agricultural income insurance to transfer risks to overcome the farmer’s loan difficulty and contract default caused by information asymmetry. We design four kinds of contracts, including the uninsured and symmetric information contract (SN contract), the uninsured and asymmetric information contract (AN contract), the insured and symmetric information contract (SY contract), and the insured and asymmetric information contract (AY contract). Through comparative analysis of the different types of contracts, several results are obtained. First, when there is no insurance, supervision of the leading enterprise can improve the farmer’s level of effort; but supervision costs are incurred, and incentive contracts can avoid the farmer’s moral hazard. Second, agricultural income insurance improves the farmer’s level of effort when information is asymmetric, which transfers risks and saves costs for all the game participants. Third, the leading enterprise prefers an asymmetric information contract and the farmer prefers AN contract when the probability of loan repayment is high