  Globally operating suppliers face the rising challenge of wholesale pricing
under scarce data about retail demand, in contrast to better informed, locally
operating retailers. At the same time, as local businesses proliferate, markets
congest and retail competition increases. To capture these strategic
considerations, we employ the classic Cournot model and extend it to a
two-stage supply chain with an upstream supplier who operates under demand
uncertainty and multiple downstream retailers who compete over quantity. The
supplier's belief about retail demand is modeled via a continuous probability
distribution function F. If F has the decreasing generalized mean residual life
property, then the supplier's optimal pricing policy exists and is the unique
fixed point of the mean residual life function. We evaluate the realized Price
of Uncertainty and show that there exist demand levels for which market
performs better when the supplier prices under demand uncertainty. In general,
performance worsens for lower values of realized demand. We examine the effects
of increasing competition on supply chain efficiency via the realized Price of
Anarchy and complement our findings with numerical results.
