Information Sharing, Information Leakage and Information Distortion in a Decentralized supply Chain with one Manufacturer and Two Competing Retailers

Decision-making based on inaccurate information or in the absence of information can result in irreparable damages. Hence, this paper examines the impact of the revenue sharing contract on information sharing and information leakage in a supply chain with one manufacturer and two competing retailers. One of the retailers has more detailed information about the forecast of uncertain demand and can share it with the manufacturer. The manufacturer may also share the information send by the retailer having more accurate information to the other one in order to gain higher profits (information leakage). Therefore, the informed retailer may share his private information with the manufacturer inaccurately. As such, the manufacturer uses a revenue sharing contract to encourage the more informed retailer to release his private information truthfully to the manufacturer and the other retailer. The results show that although the information leakage by the manufacturer increases his profit, the informed retailer encourages to share incorrect information which is harmful to the manufacturer. Besides, the sensitive analysis reveals that under revenue sharing contract, the retailer with more accurate information about the uncertain demand will share its information truthfully to the manufacturer and other retailer, which makes coordination among the member of the supply chain which increases the profit of the whole supply chain.