Quality disclosure strategy with asymmetric demand information in food supply chains

The effects of food product quality disclosure on enhancing food quality transparency have drawn wide attention to food supply chain management. However, demand information asymmetry in the vertical direction of food supply chains hinders the supplier’s quality disclosure due to the fact that the supplier is uncertain whether the profits brought by quality disclosure can offset the disclosure costs. To overcome this challenge, this paper analyzes the information interaction in food supply chains including one leading supplier who provides consumers food with uncertain quality information and two following retailers who own demand information privately; the supplier provides preservation service for the food to stimulate the demand and makes the quality disclosure decision based on the profit trade-off between disclosure and not disclosure. Our research shows that cost-effective preservation service can stimulate two retailers to share information. To avoid high information leakage, two retailers will face the prisoner’s dilemma when they achieve the final equilibrium under certain conditions. If the supplier discloses information about food with high quality, it will deepen the information leakage. Higher preservation service efficiency can avoid the retailers’ prisoner’s dilemma, whereas information disclosure of high-quality products may make the prisoner’s dilemma worse. The numerical example shows that more accurate information signals and more intense competition urge the supplier to disclose quality information. A subsidy mechanism is designed for the supplier to motivate the retailers to provide information, which enables supply chain members to gain more profits.