Optimal cooperation modes and information strategies under asymmetric sustainable investment efficiency

Abstract

Currently, sustainability is of widespread concern among consumers and branders, compelling an increasing number of suppliers to invest in sustainable practices. This paper establishes a supply chain model comprising a supplier with private investment efficiency and a brander. By employing signaling and reverse selection theories, the equilibrium strategies of the supplier and the brander are explored. Additionally, the impact of investment efficiency and the probability of H-type on the brander- s information strategy and optimal cooperation mode are analyzed. Our analyses reveal that concealing private information may not be beneficial to the supplier under the quotation mode. Moreover, when the probability of H-type is low, the supplier prefers to signal its exact type to the brander. Under the bidding mode, the brander may benefit more from not obtaining the exact supplier type. When the efficiency difference is higher and the probability of H-type is smaller, the brander indicates a preference for the quotation mode and is more willing to await a signal from the supplier. Furthermore, different information structures yield different optimal cooperation modes for the brander.