Associate Professor Shuang Xiao, a researcher of the Base, has published a paper titled “Hybrid Financing in a Dual-Channel Supply Chain with Asymmetric Demand Information” in International Transactions in Operational Research.

Abstract:This study delves into the interaction between hybrid financing and asymmetric demand information within a dual-channel supply chain. In this setup, the supplier directly sells to customers and also through a capital-constrained retailer. We investigate a unique financing approach involving a blend of bank loans and supplier equity investment to support the retailer's operational (procurement and marketing) activities. Analyzing the equilibrium strategies under both symmetric and asymmetric information settings yields intriguing insights. In the case of symmetric information, we find that the retailer's equilibrium order quantity decreases with the potential market size under hybrid financing, contrary to traditional notions. When asymmetric information is present, a higher acceptance of supplier equity investment by the retailer tends to lead to order quantity distortion downward, increasing signaling costs. Furthermore, a greater proportion of supplier equity investment prompts the retailer to order more products, ultimately boosting profits for both the retailer and supplier. This suggests that supplier equity investment can enhance supply chain efficiency and alleviate the double marginalization effect.

Keywords: dual-channel supply chain; capital constraint; supplier equity investment; asymmetric demand information; signaling game

Link:https://doi.org/10.1111/itor.13541

Author profile

Shuang Xiao ,Associate Professor at the School of Finance, Zhongnan University of Economics and Law. her main research field is corporate finance. In recent years, she has published extensively in journals including Journal of Cleaner Production, International Transactions in Operational Research, International Journal of Management Science, Asia-Pacific Journal of Operational Research, IEEE Transactions on Industrial Informatics, and Finance Research Letters. She serves as a reviewer for several SSCI journals and has participated in numerous projects funded by the National Natural Science Foundation of China.