Impacts of sequential acquisition,market competition mode,and confidentiality on information flow |
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| Authors: | Zhongyuan Hao Li Jiang Wenli Wang |
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| Affiliation: | 1. College of Economics and Management, Nanjing University of Aeronautics and Astronautics, Nanjing, People's Republic of China;2. Department of Logistics and Maritime Studies, The Hong Kong Polytechnic University, Hung Hom, Hong Kong SAR, People's Republic of China;3. School of Economics and Management, Taiyuan University of Science and Technology, Taiyuan, People's Republic of China |
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| Abstract: | We investigate information flow in a setting in which 2 retailers order from a supplier and sell to a market with uncertain demand. Each retailer has access to a signal. The retailers can disclose signals to each other (horizontal information sharing), while the supplier can solicit signals by offering retailers differential payments as incentives for signal disclosure (vertical information acquisition). In the base setting, market competition is in quantity, and a retailer can fully infer the signal that the other retailer discloses to the supplier. We show that the supplier prefers to sequentialize the procedure for information acquisition. Moreover, vertical information acquisition by the supplier is a strategic complement to horizontal information sharing between the retailers to establish information flow. In the equilibrium, the retailers have no incentive to exchange signals, but system wide information transparency can be realized through a combination of information acquisition and inference. We further study the signaling effect, whereby the supplier utilizes wholesale pricing as an instrument to affect the retailers' inference of the shared signals, and price competition to explore their impacts on the supplier's preference for sequential acquisition and the sustainability of information flow. |
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| Keywords: | cooperative decision inference information sharing market competition signaling |
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