Information Sharing in an Online Game Supply Chain

We study an online game supply chain that is composed of a game developer and a distributor. We investigate the impact of the distributor sharing demand information on the game quality investment during the game development stage and the marketing investment. Our analyses show that information sharing does not always improve marketing investment. When the online game market demand is relatively insensitive to the game price, sharing information motivates the distributor to invest more in marketing. In addition, information sharing always affects the developer's decision in product quality. The developer will be less conservative in product quality when it is more certain about the market demand and commit a higher investment after having demand information shared with it. For the distributor, we find that information sharing only results in a higher markup decision when the market demand is not very sensitive to the game price. There exists a Pareto improvement region so that the distributor will voluntarily share the demand information, which benefits both supply chain members.