Two-way information sharing under supply chain competition

- Propose a two-way information sharing model under a supply-chain-level competition.
- Investigate the equilibrium behavior of players in two competing supply chains.
- Find competition can increase the value of information sharing for supply chain.
- Explain how the information sharing in a supply chain impacts the rival's value.

We study manufacturer-retailer bilateral information sharing in two competing supply chains (SCs), in which both the manufacturer and the retailer have partial information on demand. Based on Bertrand competition model and Winkler's consensus model, we develop a finite Bayesian Stackelberg game to analyze the two-way information sharing problem under horizontal supply chain (SC) competition. In line with the literature, we find that sharing demand forecast voluntarily in a SC benefits the manufacturer but hurts the retailer. However, we find whether SCs benefit from information sharing depends on competition intensity and forecast error. As competition is intensive, the expected values of information sharing (EVISs) for the entire SCs are high. Moreover, information sharing in one supply chain can improve the rival supply chain's EVIS under some conditions. Numerical experiments are conducted to get some managerial insights.