Ronald H. Rasch
Auburn University

James V. Hansen
Brigham Young University

Electronic Data Interchange (EDI) applications change the ways in which firms do business and provide the foundations for information sharing among trading partners. This article presents a formal model to analyze EDI information sharing arrangements, which can benefit the organization by reducing costs and enabling optimal pricing strategies. The results of a simulation show that sharing even modest subsets of information can produce superior performance for all trading partners. These results are consistent with choices that have produced significant benefits in practice. Since each EDI arrangement will be unique to the firms involved, general guidelines can only be determined based on evaluating a number of different situations. Although the determination of these rules is beyond the scope of this article, an approach is developed that can be used as an initial starting point to evaluate alternative EDI information sharing arrangements.