Chao, Huan, Guan, Xu, Fan, TiJun and Zhou, Li ORCID: https://orcid.org/0000-0001-7132-5935 (2019) The acquisition of quality information in a supply chain with voluntary vs. mandatory disclosure. Production and Operations Management, 29 (3). pp. 595-616. ISSN 1059-1478 (Print), 1937-5956 (Online) (doi:10.1111/poms.13130)

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Abstract

Quality information acquisition and disclosure have significant ramifications for supply chain members. This paper investigates the interaction between a manufacturer's product quality information acquisition and different product quality information disclosure systems in a supply chain wherein the manufacturer can privately acquire the precise quality information of its product by affordable means initially. We consider two different quality information disclosure systems for the quality information acquisition: voluntary disclosure (i.e., the manufacturer determines whether to disclose the quality information that he has acquired), and mandatory disclosure (i.e., the manufacturer is mandated to disclose the quality information that he has acquired). We examine the effects of voluntary disclosure and mandatory disclosure on the equilibrium strategies and payoffs of the manufacturer and the retailer and on the consumer surplus. It is shown that mandatory disclosure significantly reduces the manufacturer's incentive to acquire the precise product quality information and leads to a reduction in the product quality information that the retailer and the consumers can receive. Interestingly, although the manufacturer is ex‐ante better off, the retailer's ex‐ante payoff and the expected consumer surplus become lower under mandatory disclosure, as opposed to voluntary disclosure of product quality information.

Item Type:	Article
Uncontrolled Keywords:	quality, information acquisition, voluntary disclosure, mandatory disclosure, supply chain, game theory
Subjects:	H Social Sciences > HF Commerce
Faculty / School / Research Centre / Research Group:	Faculty of Business Faculty of Business > Department of Systems Management & Strategy Faculty of Business > Networks and Urban Systems Centre (NUSC) Faculty of Business > Networks and Urban Systems Centre (NUSC) > Connected Cities Research Group
Last Modified:	28 Oct 2021 01:38
URI:	http://gala.gre.ac.uk/id/eprint/25889

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