Information Sharing in a Dual-Channel Supply Chain with Consumers' Free Riding

This paper studies a retailer's information sharing strategy when free-riding behavior exists in a dual-channel supply chain. In a dual-channel supply chain, with one retailer and one manufacturer, the retailer can obtain more accurate market demand information than the manufacturer. We explore the value of information sharing by comparing the profits in the two cases, that is, the retailer share and do not share the demand information with the manufacturer. The results show that when there is free-riding behavior, the retailer shares market demand information that is to her benefit. The retailer, the manufacturer as well as the supply chain can benefit from information sharing. Free-riding behavior will weaken the willingness of the retailer to share information, but it will promote the manufacturer to encourage the retailer to share information.