This paper investigates contracts adjustment between one manufacturer and one retailer under bilateral information updating.\nThe manufacturer incurs uncertain production cost and the retailer faces uncertain demand, but they can acquire independent\nsignals to update production cost and demand, respectively. They commit an initial agreement on an initial wholesale price,\nminimum order quantity, and information sharing as well as the transfer payment and decisions adjustment when information is\nupdated. We find that due to the joint impact of production cost variation and market variation, the manufacturer may not\ndecrease (increase) her wholesale price when the updated production cost is lower (higher) than expected. The retailer places an\nadditional order even if the wholesale price rises when the market outlook is good, but places an order with the minimum order\nquantity even if the wholesale price falls when the market outlook is bad. Secondly, for a certain level of information accuracy of\nthe production cost and market demand, the retailer is always better off with information updating, but the manufacturer may be\nworse off with information updating when facing a bad market outlook. Thirdly, when information accuracy of the production\ncost and market demand varies, the manufacturer only benefits from a high accuracy of production cost. Profits of the retailer and\nthe supply chain are increasing (decreasing) with accuracy of production cost if the updated production cost is larger (smaller)\nthan expected.
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