Value of cost information sharing in a supply chain with Bertrand retailers

A two-level supply chain with one manufacturer in the upstream and two competing retailers in the downstream was used to investigate the value of information sharing in a supply chain with competing retailers. The retailers are assumed to be engaged in a Bertrand competition. The benefits to all members of the supply chain of information sharing are evaluated for no retailers sharing their cost information, only one sharing, or both sharing their information. The results show that with Bertrand competition between the retailers, the manufacturer is always better off with cost information sharing but the retailers are always worse off and that no cost information will be shared with the manufacturer on a voluntary basis. The results also show that for certain conditions complete information sharing can be achieved through a side payment.