Coordination of a Green Supply Chain with One Manufacturer and Two Competing Retailers under Different Power Structures

Abstract

e main objective of this research is to examine the role of power relationship in a two-level green supply chain which is made up of one shared manufacturer and two competitive retailers. We develop six game theory-based models to explore the members' operational decisions in a supply chain taking into account three vertical power structures (Manufacturer Stackelberg, Retailer Stackelberg, and Vertical Nash) as well as two retailers' horizontal power structure (Bertrand or Stackelberg competition). en, we design a two-part tariff contract which can encourage the supply chain members to promote cooperation and eventually coordinate the decentralized green supply chain under each power structure. Lastly, to further discuss the impact of the green awareness of consumers and the greening cost on supply chain players' operational decisions and profits, we employ some numerical examples to conduct sensitivity analysis. e main conclusions are as follows. Firstly, the impact of power structure on the supply chain players' operational decisions and profits mainly depends on the substitutability of the green products, the green awareness of consumers, and the greening cost for the manufacturer. Secondly, the more power the manufacturer has, the lower product greenness will be set. irdly, the consumer's environmental awareness (the greening cost) positively (negatively) influences the manufacturer's product greenness and wholesale price, the retailers' sales prices, and the player's profits under each power structure. Finally, the developed two-part tariff contract is practicable and beneficial for both the manufacturer and the two retailers.

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“…They pointed out that environmental awareness could improve a firm’s profit in GSCM. Wang et al [ 4 ] studied the effect of government subsidies on members’ revenues in GSCM, and the results showed that they have a positive influence on the selling channel selection. Zhang and Li [ 5 ] discussed the optimal results for a point firm in GSCM and pointed out that the greenness level has a vast impact on the GSCM.…”

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“…Their research showed that the balanced power structure always performs best for the whole SC. Wang et al [19] explored the operational decisions and coordination of a green SC with one manufacturer and two retailers taking into account three vertical power structures VOLUME 4, 2016 This work is licensed under a Creative Commons Attribution 4.0 License. For more information, see https://creativecommons.org/licenses/by/4.0/ This article has been accepted for publication in a future issue of this journal, but has not been fully edited.…”

“…Note that the above-mentioned research looked exclusively at SC pricing decisions or coordination and management insights were gained. In particular, literatures [17], [18] and [19] were similar to this paper, they studied the pricing decisions under three power structures between one manufacturer and two retailers, but none of these considered carbon emissions policy. In this paper, we introduce CT policy into a one-manufacturer and two-retailers SC model, and analyse the influence of CT rate on pricing and enterprise profits.…”