75 / 2024-04-19 09:39:07

Platform Information Sharing with Heterogeneous Manufacturers

Hybrid selling modes, Quality differentiation, Information sharing, Signaling, Online platform

We consider a supply chain composed of one agency selling manufacturer and one reselling manufacturer selling vertically differentiated products through a common online platform. The platform decides whether to share information with the agency selling manufacturer and/or the reselling manufacturer. The existing literature on information sharing in pure selling modes argues that the platform should share with the agency manufacturer rather than the reselling manufacturer. In strict contrast to the conventional wisdom, we find that in the hybrid selling mode, it may be optimal for the platform to share only with the reselling manufacturer or share with both manufacturers simultaneously under certain conditions. Specifically, when the agency manufacturer has a quality advantage, the platform should share only with the reselling manufacturer if the commission rate and the quality ratio are both high enough, and the probability of high demand is relatively moderate; the platform should share with both manufacturers simultaneously if the commission rate, the quality ratio, and the probability of high demand are all very high. Moreover, we also demonstrate that when the agency selling manufacturer has a quality advantage, the platform can charge the reselling manufacturer a fixed information fee to achieve a Pareto improvement with a transition from sharing only with the agency selling manufacturer to sharing with both manufacturers simultaneously. However, such type of a Pareto improvement is non-existent when the reselling manufacturer has a quality advantage.