Abstract: An accurate grasp of market demand is undoubtedly an important factor for retailers to gain a competitive advantage. Retailers often strategically use their informational advantage to control the direction of competitors' decision-making in the process of game in order to indirectly influence the information flow, logistics, capital flow, which will make they get optimal profits. Meanwhile, competitors could also strategically feedback decisions to avoid failure when they realize the information may be concealed, distorted. In addition, more and more products have a variety of cost price and different sources in the operation of supply chain and in the competitive market. The cost advantage is also one of the most important baselines in the competition for terminal retailers in supply chain. Therefore, the study of the motivation of information sharing under cost difference and the way that information is shared is the problem to be solved and is of practical significance. The reverse derivation method is used to discuss the strategy of information sharing for two terminal retailers including the large retailer making its own products and the small retailer wholesaling products from upstream manufacturer in the situation where market information and cost are asymmetric for members in supply chain. The strategy includes the large retailer of information advantage decide whether to share information and how to share information; how the small retailer of information disadvantage decide the order quantity according to the market information shared by the competitor; how the manufacturer from upstream supply chain decide wholesale price to control the situation of game of the entire supply chain and make the downstream retailer more proactive in competition. Research shows that the strategies chosen by large retailers are related to the market:The large retailer are inclined to share information in the low market type to make competitors reduce order quantity; the large retailer still choose to share information to show competition advantage in the high market type if the market fluctuation is small, which will deter the intruders to some extent; when the market fluctuation is large, the information sharing is not selected because the additional gains from information sharing cannot offset the rent of information transmission, however, because in the low market type large retailer would choose to share information, so in this case, although the large retailer are forced to share information even they do not want to do that. And manufacturer influence the cost advantage of large retailer by making wholesale price, which will finally affect the strategies of information sharing in supply chain. The final conclusions can be drawn by the way combining modeling with analysis of examples. What's more, the built model is simulated numerically by Mathmatica to verify the conclusions, which can ensure the accuracy and applicability.

Key words: asymmetric information, information sharing, rational equilibrium, ordering strategy