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Information Asymmetry and Minimum Quality Standards in Supply Chain Oligopolies

  • Anna Nagurney
  • Dong Li
Chapter
Part of the Springer Series in Supply Chain Management book series (SSSCM, volume 2)

Abstract

This chapter begins Part II of this book with Part II focusing on information asymmetry in product quality. We present a supply chain network model with information asymmetry in product quality. The competing profit-maximizing firms with multiple manufacturing plants know the quality of the product that they produce but consumers, at the demand markets, are aware only of the average quality. The framework is relevant to products ranging from certain foods to pharmaceuticals to durables such as automobiles. We propose an equilibrium model and its dynamic counterpart and show how minimum quality standards can be incorporated. Qualitative results and an algorithm are presented, along with convergence results. The numerical examples, with sensitivity analysis, provide valuable insights for firms, consumers, as well as policy-makers, who impose the minimum quality standards.

Keywords

Supply Chain Variational Inequality Information Asymmetry Quality Level Demand Market 
These keywords were added by machine and not by the authors. This process is experimental and the keywords may be updated as the learning algorithm improves.

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Copyright information

© Springer International Publishing Switzerland 2016

Authors and Affiliations

  • Anna Nagurney
    • 1
  • Dong Li
    • 2
  1. 1.Isenberg School of ManagementUniversity of MassachusettsAmherstUSA
  2. 2.Department of Management and Marketing College of BusinessArkansas State UniversityState UniversityUSA

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