Strategic Use of Demand-Enhancing Investment to Elicit Market Information

36 Pages Posted: 15 Aug 2011

See all articles by Brian Mittendorf

Brian Mittendorf

Ohio State University (OSU) - Fisher College of Business

Jiwoong Shin

Yale School of Management

Dae-Hee Yoon

Yonsei University

Date Written: July 12, 2011

Abstract

Retailers are often willing to share demand information with manufacturers despite the danger that manufacturers will exploit such information for their own benefit. To this end, theoretical research in operations and marketing has consistently warned that retailers should be more cautious in sharing information upstream. In this paper, we seek to provide one explanation for this apparent disconnect between theory and practice, one rooted in manufacturer investments. Whether launching new products or supporting existing offerings, manufacturers often undertake substantial investments in advertising and promotion at the behest of their retailers. This paper shows that such manufacturer efforts are not purely altruistic but may be part of a more complex tit-for-tat wherein retailer information sharing and manufacturer investment are mutual best responses.

Keywords: Information sharing, demand-enhancing investment, supply chain management, disclosure, vertical relationship

JEL Classification: D82, L14, M41, M31

Suggested Citation

Mittendorf, Brian and Shin, Jiwoong and Yoon, Dae-Hee, Strategic Use of Demand-Enhancing Investment to Elicit Market Information (July 12, 2011). AAA 2012 Management Accounting Section (MAS) Meeting Paper. Available at SSRN: https://ssrn.com/abstract=1909288 or http://dx.doi.org/10.2139/ssrn.1909288

Brian Mittendorf

Ohio State University (OSU) - Fisher College of Business ( email )

2100 Neil Avenue
Columbus, OH 43210-1144
United States

Jiwoong Shin

Yale School of Management ( email )

135 Prospect Street
P.O. Box 208200
New Haven, CT 06520-8200
United States

HOME PAGE: http://faculty.som.yale.edu/JiwoongShin/

Dae-Hee Yoon (Contact Author)

Yonsei University ( email )

School of Business
Seoul
Korea, Republic of (South Korea)

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