We study the pricing problem between two firms when the manufacturer’s willingness to pay(wtp) for the supplier’s good is not known by the latter. We demonstrate that it is in theinterest of the manufacturer to hide this information from the supplier. The precision ofthe information available to the supplier modifies the rent distribution. The risk ofopportunistic behaviour entails a loss of efficiency in the supply chain. The model isextended to the case of a supplier submitting offers to several manufacturers. Somemanagerial insight through a numerical illustration is provided.
