Online platform demand information sharing with upstream suppliers under the imbalanced market power structure

Abstract

This work investigates online platform information sharing strategies in a supply chain consisting of an online platform and two, one leading (Supplier A) and the other following (Supplier B), suppliers with an imbalanced market power structure under the agency mode. The online platform has demand information, and the two suppliers engage in horizontal retail price competition. Four information sharing scenarios are examined, including no information sharing (S1), full information sharing (S2), information sharing with only Supplier A (S3), and information sharing with only Supplier B (S4). Game models, involving a signaling game for scenario S3, are formulated. The equilibrium solutions are further examined, the supply chain members’ preferences are analyzed among the four demand information sharing scenarios, and the equilibrium information sharing outcomes are obtained. The findings indicate that Supplier A prefers scenario S2, Supplier B prefers scenario S3, and the online platform prefers scenario S3 when the demand variability is high or low and prefers scenario S2 when the demand variability is moderate. The equilibrium information sharing outcome can be any of the scenarios depending on the demand variability and the supplier acceptance probabilities of the platform’s information sharing agreements. Extensions of the main model are explored. The equilibrium results of the main model are robust under asymmetric market potentials, intuitive criterion and divinity criterion. Under the resale mode, Supplier B prefers scenario S2 or S3, while other results remain unchanged. When the two suppliers are in a coopetition relationship, the theoretical outcomes are significantly different from those of the main model.