Please , provide the mansucript number ! ) Does Private Information about Inventories Matter ?

We study the impact of multilateral private information about inventory levels on the overall performance of two-echelon supply chains. We focus on two polar cases: i) multiple suppliers serving a single retailer; and ii) a single supplier facing multiple retailers. In both cases the single party has all the bargaining power, i.e. it can commit to take-it-or-leave-it offers. In the former case, we find that the inventory policy that solves the centralized cost minimization problem remains optimal for the retailer, even in the presence of multilateral private information. Moreover, the retailer can appropriate the cost reduction of the entire supply chain. In the latter case, the contract that is optimal for the supplier induces a simple ranking allocation rule, based on critical fractiles of adjusted demand distributions that account for the incentives generated by private information. This rule also reverses the order of all served retailers’ inventory positions; and, for intermediate values of the supplier’s initial inventory level, “overshoots” the positions of some retailers, i.e. pushes them beyond their optimal levels without private information. Our results suggest that supply chains in which parties that are more exposed to demand uncertainty have stronger bargaining positions perform better in terms of operating cost.