Quality Disclosure and Advance Selling Under Consumer Risk Aversion

The disclosure of product quality information has an important impact on the members of the supply chain. Technological development allows manufacturing companies to obtain accurate quality information in advance, and at the same time forms information asymmetry between buyers and sellers, and sellers have more private information. Information disclosure can limitedly alleviate the information asymmetry between the two sides. This paper intends to explore the product quality information disclosure strategy in the supply chain. In the case of uncertain product quality, manufacturers can afford certain technical costs to obtain private information and decide whether to disclose information to update the buyer’s beliefs. The manufacturer sells the goods in two stages. In the first stage, the quality of the products is uncertain. According to the information disclosed, the buyer can choose the first stage to buy the goods at a discount but bear the uncertainty of the quality, and can also buy the goods in the second stage. This paper intends to establish a two-period game theory model to study the manufacturer’s equilibrium quality information disclosure strategy and revenue.