EXPRESS: Informed Retailer’s Strategic Information Sharing in a Supply Chain with Competing Retailers

This paper investigates the informed retailer’s demand-information sharing problem within a supply chain characterized by production economies or diseconomies of scale and downstream competition. Using a game-theoretical model, we analyze multiple information-sharing regimes—from no sharing to partial or full (public) disclosure of private demand information. Our results show that under production economies of scale, partial information sharing triggers wholesale price distortion by the manufacturer—referred to as the signaling effect—whose magnitude critically depends on the degree of economies of scale. This effect harms retailers when economies of scale are weak but benefits them when economies of scale are strong. In contrast, under production diseconomies of scale, the signaling effect is detrimental to all firms. We further demonstrate that firms’ preferences for information-sharing arrangements vary systematically with production scale conditions. Under economies of scale, the informed retailer may optimally choose either no sharing or partial sharing, whereas under diseconomies of scale, the informed retailer is generally reluctant to share information. Overall, this study provides actionable managerial insights for firms navigating information-sharing decisions in supply chains, especially when upstream manufacturers operate under production economies or diseconomies of scale and downstream competition intensifies strategic interactions.