Effect of the Information on Distribution Channel Profitability

Information is a key factor in the functioning of the market and the performance of the whole economy. However, as the free market is not always efficient in the realization of its function to the development of the economy, so the information do not produce only positive effects on the functioning of the economic system. Likewise, in the area of distribution channel management, information considerably determines its successful functioning, and various barriers could induce distorted market functioning and unfavourable economic effects, not only for the manufacturing firms selling their products, but for the retailers and ultimate consumers of the products too. In this paper we discuss problems that arise because of the asymmetry of information, especially consequences in the form of adverse selection and moral hazard in the domain of distribution channel functioning.