Channel structure and evolutionary stability analysis between traditional and green service supply chains

Abstract

This paper aims to explore the long-term Evolutionary Stability Strategy (ESS) of vertical channel structure strategic interaction between Traditional and Green Service Supply Chains (TSSC and GSSC) and figure out the optimal pricing and green service decisions. Considering that two types of supply chains could choose between centralized (C) and decentralized channel structures (D), we first establish four channel structure models based on optimization theory, namely, Models DD, DC, CD, and CC. Wherein Model DD(CC) means that two supply chains adopt the channel structure D(C) simultaneously and Model DC(CD) refers to GSSC adopting the channel structure D(C) while TSSC using the channel structure C(D). Further, we develop an evolutionary game to discuss the ESSs of the dynamic competitive system under different market environment. The research results show that the stronger the integration between upstream and downstream firms of GSSC is, the supply chain would more likely provide higher green service when the TSSC has a decentralized channel structure.Moreover, when the competition between two supply chains is sufficiently low, only point (0,0) is the ESS; when it is moderate, there are two ESSs, i.e., ESS (0,0) and ESS (1,1); when it is very high, only point (1,1) is the ESS. Numerical studies are conducted to examine the effects of competition coefficient on prices, demands and profits, as well as the roles of initial states of two supply chains' channel strategies on their ESSs.