Innovator's Edge in Supply Chain Transparency and Food Waste Reduction

Digital technologies are transforming fresh produce retail by enabling real-time freshness tracking and direct consumer access to supply chain data. However, adopting these technologies comes at a high cost. It is therefore essential to determine whether an innovator - the first retailer to adopt supply transparency technology - gains a competitive edge over a follower, who adopts it only after the innovator, and under what conditions this advantage justifies the investment. In a duopoly with freshness-sensitive demand, we show that the innovator benefits from higher profits, greater consumer satisfaction, and improved demand fulfillment - particularly when consumers value transparency.

Additionally, the innovator curbs more food waste through a market shrinkage effect, where the competitor's market share contracts, reducing supply-demand mismatches. We further find that industry-wide adoption is more likely in less competitive markets, suggesting that grocery retail mergers could accelerate transparency adoption and enhance consumer demand satisfaction. Finally, we extend our analysis to cases involving freshness-based discounts and sequential adoption.

Speaker: Jeannette Song, Duke University

Room 3108