255 / 2024-04-23 20:42:54

Unveiling the Ideal Match: Leveraging Demand Enhancement Endeavors and Information Asymmetry in Channel Partner Selection

Game theory; pricing; demand information asymmetry; demand enhancement endeavor; supply chain

The choice of partners in establishing the supply chain (SC) can lead to different power structures. In this paper, we consider a two-level supply chain with one manufacturer and one retailer. The manufacturer invests in demand enhancement endeavor (DEE) to stimulate product demand. However, the retailer holds private demand information. We explore the joint impact of the manufacturer’s wholesale price and DEE investment on the retailer’s information-sharing strategies under different power structures, i.e., manufacturer/retailer-led Stackelberg game and Nash structure game. The results show that, the SC members’ preferences on power structures depend on several factors, including the accuracy of the demand signal, the degree of demand uncertainty, and the joint impact of the wholesale price and DEE investment on demand, and the retailer (manufacturer) may not always benefit from the retailer (manufacturer)-led Stackelberg game.