Price strategy, information sharing, and firm performance in a market channel with a dominant retailer

Purpose – The purpose of this paper is to provide a framework to help the manufacturers to find the optimal decisions regarding the choice of channel member for information sharing. Design/methodology/approach – A game‐theoretical model plus Bayesian forecasting is developed to determine the optimal decisions for the manufacturer. Findings – The results show that the optimal strategy for the manufacturer is to engage in information sharing with one small retailer exclusively, such that the manufacturer can gain the most benefit from information sharing arrangement in a marketing channel with a dominant retailer. Research limitations/implications – The present study is analyzed by a theoretical model. Future research can explore the same study by collecting data to engage in an empirical test. Practical implications – This paper provides a useful model framework and pricing strategy for upstream manufacturers who are engaging or planning to engage in information sharing with their retailers. Originality/value – This paper provides practical and solid advice and examples demonstrating the optimal decisions regarding the choice of channel member for information sharing to best benefit of the manufacturer.