Abstract: The effects of retailer information sharing on supplier channel encroachment strategies are studied from the perspective of production diseconomies. Considering the situation of centralized decision and decentralized decision respectively, the supply chain models are established with different supplier encroachment strategies, and supplier's encroachment strategies and the value of retailer's information sharing are analyzed. The results show that regardless of centralized or decentralized decision, when the entry cost of encroachment is less than the threshold value, the supplier always tends to encroach and open direct channel. Under decentralized decision, information sharing always increases the benefits of the supplier and erodes the benefits the retailer. However, under certain conditions, the retailer can be encouraged to share his/her private forecast information voluntary through the supply chain coordination mechanism. Production diseconomies has negative effect on supply chain regardless of centralized decision or decentralized decision, and it also weakens the encroaching motive of the supplier.