Quality Investment and Green Disclosure Strategy in Competitive Supply Chains Considering Customer Trust

Purpose: This paper investigates how product quality and green information transparency jointly influence customer trust in green products and examines competing retailers’ green disclosure and suppliers’ quality investment strategies under information asymmetry. Methodology: We develop a game-theoretic model of two competing retailers and two suppliers with asymmetric quality investment costs. We characterize equilibrium outcomes in sequential disclosure games and study the effects of the trust factor and transparency level on the equilibrium outcomes. Findings: Three main results emerge. First, a second-mover advantage exists in sequential disclosure, namely, the later retailer free-rides on the first mover’s information. Second, higher trust intensifies competition by homogenizing customer utility, whereas greater transparency softens competition by making valuations more heterogeneous. Third, customer trust can incentivize both retailers to disclose simultaneously. Novelty: First, this paper studies consumers’ heterogeneous green preferences and considers the information asymmetry of green attributes between supply and demand. Second, this paper determines the suppliers’ quality investment considering the retailers’ strategic green disclosure and constructs the endogenous trust function. Third, this paper analyzes the retailers’ green disclosure in equilibrium, further determines the market coverage, and points out the effects of key parameters on the market coverage and the product competition.