Supply Chain Coordination Based on the Information Asymmetry and Virtual Third Party

Information asymmetry widely exists in the supply chain. The supply chain cannot be coordinated easily because of it. But coordination is important to maximize the profit of supply chain. In this paper, the situation that supplier has adverse selection and the retailer has moral hazard for information asymmetry is considered. A virtual third party is introduced to develop an incentive model from the perspective of supply chain. The result shows that this method can coordinate the supply chain under information asymmetry. And the model is proved to be the same as that in real world.