Information Leakage And Sharing In A Two-period Decentralized Supply Chain

We consider a supply chain with one manufacturer selling to one retailer who processes private demand information over two selling periods. We examine the retailer’s information sharing decisions with and without side payment, and firms’ subsequent pricing decisions. Without information sharing, in period 2 the manufacturer will infer the retailer’s private information via period-1 order quantity. We find that the retailer does not share the information voluntarily due to harmful double marginalization. However, the retailer shares the information to the manufacturer with side payments when demand uncertainty is high.