The study of incentives and coordination in supply chain with double asymmetric information based on virtual-third party

In a two-level supply chain which is composed of one manufacturer and one retailer, asymmetric information leads to low overall efficiency. To solve double adverse selection problem, incentives and coordination model with double asymmetric information is established through the virtual-third party. Some results are found that the optimal order quantity in complete information environment is different from second-best quantity in asymmetric information condition. On basis of this, bargaining negotiation solution of supply chain with double asymmetric information is get by applying R-K-S bargaining solution.