Innovation information sharing between two competitive supply chains

We study the innovation information sharing problem between two competing supply chains with one supplier and one manufacturer each. The manufacturer in each chain has private information about its product innovation degree and may choose to share such information with the competitor (horizontal information sharing), its supplier (vertical information sharing), or both (full transparency). We find that irrespective of the status of horizontal information sharing, vertical sharing always hurts the manufacturer, and sharing information horizontally is a dominating strategy for each manufacturer when the competition intensity is small. Furthermore, when competition intensity is not extremely large, full transparency can be realized through some transfer from the suppliers to the manufacturers, achieving a Pareto improvement for all parties, because the vertical and horizontal sharing are complementary to increase the supplier's benefit. Otherwise, neither horizontal nor vertical information sharing will occur.

Automated summary

The study shows that vertical information sharing is always detrimental to manufacturers in competitive supply chains, even when competition intensity is low. When competition intensity is not extremely large, full transparency can be achieved through some transfer, leading to a Pareto improvement for all parties involved.