Information disclosure structure in supply chains with rental service platforms in the blockchain technology era

Tsan Ming Choi, Lipan Feng, Rong Li

Research output: Contribution to journalArticle

1 Citation (Scopus)

Abstract

In platform operations for rental services, product information disclosure (supported by the blockchain technology) is critical to attract customers. We build a stylized duopoly model to analyze the product-information-disclosure Nash game between two rental service platforms whose products-to-rent are substituble. We derive the equilibrium level of product information disclosure and identify conditions under which the platforms choose to disclose or not to disclose information, which correspond to different types of supply chains. For the basic model, we find that there exists a critical threshold on the information-sensitive consumers which helps each platform decide whether or not to disclose product information. If the information auditing cost is sufficiently small, both platforms should disclose the product information as much as possible. For products with higher profit margin, both platforms are more likely to disclose information. We also explore the impacts of product information disclosure on the consumer surplus and seller benefits, and discuss the roles played by the blockchain technology. To check robustness of the results as well as to examine different supply chain configurations, we extend the analysis to the cases including (i) the platforms are risk averse in decision making, (ii) rather than selling the product, the seller (owner of the product) consigns the product to the platform and shares a revenue, and (iii) rather than two competing platforms, there is a common rental service platform providing service for two substitutable products. We find that the core insights remain valid in all the extended models. Managerial implications are discussed.

Original languageEnglish (US)
JournalInternational Journal of Production Economics
DOIs
StateAccepted/In press - Jan 1 2019

Fingerprint

Supply chains
Profitability
Sales
Decision making
Supply chain
Information disclosure
Product information
Costs
Seller

Keywords

  • Competition
  • Economics analysis
  • Multi-products
  • Product information disclosure game
  • Rental service platforms

ASJC Scopus subject areas

  • Business, Management and Accounting(all)
  • Economics and Econometrics
  • Management Science and Operations Research
  • Industrial and Manufacturing Engineering

Cite this

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title = "Information disclosure structure in supply chains with rental service platforms in the blockchain technology era",
abstract = "In platform operations for rental services, product information disclosure (supported by the blockchain technology) is critical to attract customers. We build a stylized duopoly model to analyze the product-information-disclosure Nash game between two rental service platforms whose products-to-rent are substituble. We derive the equilibrium level of product information disclosure and identify conditions under which the platforms choose to disclose or not to disclose information, which correspond to different types of supply chains. For the basic model, we find that there exists a critical threshold on the information-sensitive consumers which helps each platform decide whether or not to disclose product information. If the information auditing cost is sufficiently small, both platforms should disclose the product information as much as possible. For products with higher profit margin, both platforms are more likely to disclose information. We also explore the impacts of product information disclosure on the consumer surplus and seller benefits, and discuss the roles played by the blockchain technology. To check robustness of the results as well as to examine different supply chain configurations, we extend the analysis to the cases including (i) the platforms are risk averse in decision making, (ii) rather than selling the product, the seller (owner of the product) consigns the product to the platform and shares a revenue, and (iii) rather than two competing platforms, there is a common rental service platform providing service for two substitutable products. We find that the core insights remain valid in all the extended models. Managerial implications are discussed.",
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N2 - In platform operations for rental services, product information disclosure (supported by the blockchain technology) is critical to attract customers. We build a stylized duopoly model to analyze the product-information-disclosure Nash game between two rental service platforms whose products-to-rent are substituble. We derive the equilibrium level of product information disclosure and identify conditions under which the platforms choose to disclose or not to disclose information, which correspond to different types of supply chains. For the basic model, we find that there exists a critical threshold on the information-sensitive consumers which helps each platform decide whether or not to disclose product information. If the information auditing cost is sufficiently small, both platforms should disclose the product information as much as possible. For products with higher profit margin, both platforms are more likely to disclose information. We also explore the impacts of product information disclosure on the consumer surplus and seller benefits, and discuss the roles played by the blockchain technology. To check robustness of the results as well as to examine different supply chain configurations, we extend the analysis to the cases including (i) the platforms are risk averse in decision making, (ii) rather than selling the product, the seller (owner of the product) consigns the product to the platform and shares a revenue, and (iii) rather than two competing platforms, there is a common rental service platform providing service for two substitutable products. We find that the core insights remain valid in all the extended models. Managerial implications are discussed.

AB - In platform operations for rental services, product information disclosure (supported by the blockchain technology) is critical to attract customers. We build a stylized duopoly model to analyze the product-information-disclosure Nash game between two rental service platforms whose products-to-rent are substituble. We derive the equilibrium level of product information disclosure and identify conditions under which the platforms choose to disclose or not to disclose information, which correspond to different types of supply chains. For the basic model, we find that there exists a critical threshold on the information-sensitive consumers which helps each platform decide whether or not to disclose product information. If the information auditing cost is sufficiently small, both platforms should disclose the product information as much as possible. For products with higher profit margin, both platforms are more likely to disclose information. We also explore the impacts of product information disclosure on the consumer surplus and seller benefits, and discuss the roles played by the blockchain technology. To check robustness of the results as well as to examine different supply chain configurations, we extend the analysis to the cases including (i) the platforms are risk averse in decision making, (ii) rather than selling the product, the seller (owner of the product) consigns the product to the platform and shares a revenue, and (iii) rather than two competing platforms, there is a common rental service platform providing service for two substitutable products. We find that the core insights remain valid in all the extended models. Managerial implications are discussed.

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