Time-based multiple pricing policy in a supply Chain with perishable products under bilateral asymmetric information

Abstract

With increasing awareness of perishable products, green grocers are forced to be concerned about the deterioration of freshness and adopt a time-based multiple pricing (TMP) policy. However, the reluctance of supply chain members to share their information exacerbates the predicament in the perishable product industry. This paper focuses on the TMP policy with bilateral asymmetric information that the supplier conceals freshness information and the retailer conceals demand information. Differing from existing literature, we adopt the TMP policy to release the retailer from the inferiority of information asymmetry. Based on the Stackelberg game model, three main conclusions are summarized as follows. First, information asymmetry does not always damage profits of the agent in the supply chain. Second, when the retailer agrees to adopt the TMP policy, the TMP policy decreases the price but the retailer can benefit from the low price in perishable product industry. Third, interestingly, the TMP policy can mitigate the impact of information asymmetry that reduces profits of the retailer. However, the mitigation of the TMP policy is limited and it cannot undo the detrimental effects instigated by information asymmetry. Thus, managers in the perishable product industry should adopt the TMP policy as a countermeasure to prevent the reverse caused by information asymmetry.