Pricing policies of a competitive dual-channel green supply chain

This paper focuses on the reduction of carbon emissions driven by cap-and-trade regulation and consumers' low-carbon preference in a dual-channel supply chain. Under the low-carbon environment, we also discuss the pricing strategies and the profits for the supply chain members using the Stackelberg game model in two cases. In the first (second) case where the initial proportion of consumers who prefer the online direct channel (traditional retail channel) is "larger", the direct sale price of low-carbon products could be set higher than (equal to) the wholesale price. And it is shown that in both cases, tighter cap-and-trade regulation and higher low-carbon preference stimulate the manufacturer to cut carbon emissions in its production process. However, improving consumers' low-carbon preference is more acceptable to the supply chain members. It always benefits the manufacturer and the retailer. In comparison, the firm's profit increases with carbon price only when the clean production level is relatively high. Our findings can provide useful managerial insights for policy-makers and firms in the development of low-carbon sustainability.

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“…Following Liu et al [32], Li et al [46] and Ji et al [47], we assume the extra cost is a quadratic function of emission reduction level:…”

Section: The Modelmentioning

confidence: 99%

Analysis of Carbon Emission Reduction in a Dual-Channel Supply Chain with Cap-And-Trade Regulation and Low-Carbon Preference

2018

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“…Lee et al [28] suggest that carbon emissions persistently decrease firm value. Li et al [29] develop Stackelberg game model to investigate the pricing and greening strategies for the chain members under both decentralized and centralized scenarios. They point out that manufacturer will not add a direct channel if the greening cost satisfies certain conditions.…”

Section: Rq1mentioning

confidence: 99%

Low Carbon Strategy Analysis of Competing Supply Chains with Different Power Structures

Liu

Tsai

2017

Sustainability

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This paper investigates the emission reduction performance for supply chain members in both single-channel and exclusive dual-channel cases. Two game scenarios (Manufacturer Stackelberg and Retailer Stackelberg) are examined under different channel structures. Furthermore, we introduce government subsidies as an impact factor of low-carbon strategy adoption. In the single-channel (Case 1), we mainly examine the influence of consumers' price-sensitivity on channel members' optimal decisions. In the dual-channel (Case 2), we focus on the joint impact of product substitutability and different channel power structures on the optimal decisions under asymmetric related channel status. The analysis suggests that the Stackelberg leaders always perform better than their corresponding followers before emission reduction, while they may not necessarily yield more benefits after emission reduction. The implementation of low-carbon strategy depends on parameters like product substitutability and channel base demand. Finally, all the supply chain members will encounter a Prisoner's Dilemma when the product substitutability is relatively high.

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“…To engage in green product production, only the green product manufacturer (Manufacturer 1) has to invest extra capital to employ green technologies based on the original production process. We assume that the greening improvement in the product does not affect the manufacturer's traditional marginal costs of production [5,8]. It is common knowledge that firms make initial changes in products and process easily, while the subsequent improvement being more difficult [20].…”

Section: Model Formulationmentioning

confidence: 99%

“…Substituting Equations (10)-(12) into Equations (8) and (9), we can obtain the retailer's optimal marginal profits in the Bertrand model.…”

Section: Propositionmentioning

confidence: 99%

Pricing Policies in Green Supply Chains with Vertical and Horizontal Competition

Chen

Wang

et al. 2017

Sustainability

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Abstract:The paper explores the pricing policies and green strategies in a duopoly green supply chain with vertical and horizontal competition, which includes a green manufacturer, a traditional manufacturer and a common retailer. The purpose of the paper is to address the following research problems: (1) How manufacturers' market power influences the pricing policies and green strategies of supply chain members in a green supply chain? (2) What conditions do first-mover advantage and green competitive advantage be effective simultaneously? We establish the linear demand functions of the duopoly green supply chain and obtain the players' optimal decisions under channel members' different market power. Further, we conduct sensitivity analysis and numerical examples of players' optimal decisions about consumer's environmental awareness and greening cost effector. Based on the theoretical and numerical analysis, we find that green manufacturer would benefit from the increment of consumer's environmental awareness but be depressed by the increase of greening cost, which is contrary to the traditional manufacturer. Additionally, correlations of retailer' optimal decisions and profits between consumer's environmental awareness and greening cost effector are related to the manufacturers' market power structures. Furthermore, we find that the green competitive advantage is more effective than first-mover advantage while first-mover advantage does not always effective in the duopoly green supply chain. Specially, traditional manufacturer always prefers to be the follower competing with the green manufacturer, no matter with the variety of consumer's environmental awareness and greening cost effector, while green manufacturer would like to be the leader only when the consumer's environmental awareness is relatively high or the greening cost effector is relatively low.

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Pricing policies of a competitive dual-channel green supply chain

Cited by 463 publications

References 38 publications

Analysis of Carbon Emission Reduction in a Dual-Channel Supply Chain with Cap-And-Trade Regulation and Low-Carbon Preference

Analysis of Carbon Emission Reduction in a Dual-Channel Supply Chain with Cap-And-Trade Regulation and Low-Carbon Preference

Low Carbon Strategy Analysis of Competing Supply Chains with Different Power Structures

Pricing Policies in Green Supply Chains with Vertical and Horizontal Competition

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