Financing The Newsvendor With Competing Supplier Under Asymmetric Information

With the rapid advancement of trade internationalization and the rapid development of China’s economy,companies from all industries can explore more opportunities,but at the same time they will face greater challenge in the competitive market.Thousands of enterprises,especially small medium enterprises are facing the problem of fund shortage.Capital-constrained retailers will obtain financing through bank credit.However,SME are often restricted by the size of the company.It is often difficult to obtain financing from banks,and at the same time they cannot reach optimal order quantity.On the other hand,the competition among most enterprises has been transformed irnto competition between supply chain and supply chain.In order to solve the stalemate of the bank credit limit and improve the overall competitiveness of the supply chain,trade credit has become an effective alternative.On the basis of the predecessors’ research,we use mechanism design theory and Stackelberg game framework in the context of demand uncertainty and internal capital information asymmetry,to study the bank credit and trade credit in a supply chain consisting of two suppliers and one retailer.First of all,this paper focuses on the problem of internal capital information asymmetry in trade credit,and we derive the trade credit contract with key parameters of wholesale price and interest rate with the help of personal rationality and incentive compatibility constraints.We find that the probability distribution of retailer type greatly affects the contract parameters.Then,this study analyzes the game between the retailer and the bank,giving the credit limit and interest rate.We find that high moral hazard and low internal capital will limit the credit,which affects the retailer’s order plan.If the capital-constrained retailer can only choose one credit,to gain more profit,we find that high-type retailers always choose bank credit,and low-type retailers prefer trade credit.Finally,this paper studies the value of the small supplier’s competition.This time,the big supplier will guarantee that the retailer gets more profit when working with it than working with the small supplier.The analysis finds that the competitive value to retailer is positive,but will decline with the small supplier’s production cost and bank credit interest rate,and the high-type retailer can gain more competitive value than the low-type retailer.In addition,we will use numerical simulation to intuitively clarify the conclusions of this paper.In summary,this paper incorporates information asymmetry and supplier’s competition into the credit financing model,which providing a reference for retailer to make credit and operation decisions,having certain practical guiding significance.