Platform’s information sharing strategy in a supplier encroachment context with economies of scale
研究了平台在供应商入侵情境下是否与合同制造商共享市场需求信息，发现信息共享可能导致需求下降、价格上升，损害消费者和社会福利，且规模经济可能反噬平台和品牌制造商。
This paper investigates a new business phenomenon where platforms nurture contract manufacturers (CMs) by sharing market demand information. We consider a game-theoretical model that an original brand manufacturer (OBM) outsources the production to a CM, who encroaches the end-customer market with a competing product. The CM’s production cost can benefit from economies of scale. Both the OBM and the CM sell their product through a common online platform. The platform has accurate market demand information and determines whether to share with the CM. When it does, a signaling game between the OBM and the CM arises. Unlike a typical signaling game, we show that each type of CM may have an incentive to mimic the other type. This is driven by the CM’s two opposite drivers: wants the OBM to order more to achieve economies of scale, versus wants the OBM to order less to reduce competition at the end-customer market. We also find that information sharing may lead to lower demands and higher prices, and customers and social welfare may suffer as a result. Lastly, due to this information sharing option, we demonstrate how economies of scale can hurt the platform and the OBM.