Operational Decision and Sustainability of Green Agricultural Supply Chain with Consumer-Oriented Altruism

Abstract

The agricultural supply chain has to balance the economic, environmental, and social dimensions of sustainability. This paper investigates the green agricultural supply chain, consisting of a manufacturer and a retailer, who are both altruistic towards consumers. Such consumer-oriented altruism is different from the widely adopted enterprise-oriented altruism, which only measures the altruistic behaviors among supply chain enterprises. In the approach of game theory, the optimal operational decision is obtained, and thereby the economic, environmental, and social dimensions of sustainability are described rationally and attained, respectively. The impacts of consumer-oriented altruism on the sustainability of the green agricultural supply chain are analyzed and compared in a systematic way. A case study is carried out before drawing conclusions and managerial implications. The findings can be concluded as follows. Firstly, consumer-oriented altruism changes the operational performance of the green agricultural supply chain by enhancing the green level of agricultural products, cutting down the pricing decisions and marginal profit of each supply chain enterprise. Secondly, consumer-oriented altruism simultaneously facilitates each dimension of sustainability to different extents, and economic sustainability is promoted the most prominently, whereas environmental sustainability is improved the least. Thirdly, the retailer’s consumer-oriented altruism always improves each dimension of sustainability more than the manufacturer’s altruism does, and the advantage in the economic dimension is the most significant, while that in the environmental dimension is the smallest.

Optimizing Operational and Sustainable Decisions for GASC

“…Indeed, as the global economy grows and environmental degradation worsens, solely relying on self-interest and fairness may not suffice for decision-makers to pursue economic interests. Altruism, especially outward altruism, is deemed more conducive to achieving the goals of sustainable development (Ge & Hu, 2012;Wei et al, 2022). However, it is worth noting that this research did not consider the role of government subsidies in environmentally friendly product contexts.…”

“…Wang, Yu, et al (2021) analyzes the altruistic preferences of dominant retailers towards small and medium-sized manufacturers in low-carbon supply chains, highlighting potential trade-offs in-retailer profits. Conversely, Wei et al (2022), for the first time, introduces the concept of outward altruism, advocating for manufacturer and retailer altruism directed toward consumers to enhance consumer welfare, particularly. The rationale behind this proposition lies in the fact that consumers show a willingness to pay higher prices for products when altruistic manufacturers invest in environmentally friendly technologies.…”

“…In this scenario, the manufacturer exhibits altruism toward consumers, prioritizing consumer surplus, as described by Wei et al (2022), where the utility function is defined as u m = π m + η m c s . Here, the altruistic force η m represents the manufacturer's degree of concern for consumer surplus relative to self-interest.…”

“…Based on the theoretical assumptions and real data collected for QFDY, standardized similar to the approach taken by Wei et al (2022), key factors, such as market scale α=20 , price sensitivity β = 0.2 , marginal cost of green investment θ = 100 , unit production cost c = 5 , environmental damage per unit of pollutant ξ = 25 , and consumer surplus expenditure λ = 2.5 , are considered for analysis due to their economic significance and the comparability across different backgrounds.…”

“…This abstains from using pesticides, chemical fertilizers, and excessive land exploitation in their rice cultivation techniques. Pioneering organic methodologies, their rice is priced at CNY256/kg (Wei et al, 2022). Thereby, agricultural enterprises can enhance the green level of their products through sustainable production technologies, thereby justifying higher prices, as consumers with green preferences often exhibit a willingness to pay more for products with a higher green level.…”