Strategic Information Disclosure and Encroachment in a Co‐Opetitive Supply Chain: Bayesian Persuasion Perspective

ABSTRACT We investigate the optimal information disclosure policy in an environment where an online platform, possessing private market demand information, interacts with an original brand manufacturer (OBM) and a contract manufacturer (CM) with asymmetric brand power. The OBM enjoys a brand advantage, while the CM may encroach on the market if the profitability justifies the encroachment cost. The platform, leveraging data advantages, influences the manufacturers' decisions through strategically designed disclosure policies. The optimal disclosure policy depends on the CM's encroachment cost and the OBM's brand advantage. First, full disclosure is optimal when the encroachment cost is sufficiently high or low. Second, partial disclosure is optimal for distorting the posterior expectation about market demand downward when encroachment costs are moderately high, or upward when they are moderately low. Third, partial disclosure can induce encroachment if the brand advantage is small or deter it if the brand advantage is large. The platform profits from the optimal policy, which may come at the expense of the OBM and CM. We demonstrate that the optimal policy can enhance profits for the entire supply chain under intense competition and a large brand advantage. This study provides a critical framework and practical insights for understanding strategic decisions and channel management.