IDEAS home Printed from https://ideas.repec.org/a/eee/proeco/v170y2015ipbp563-575.html
   My bibliography  Save this article

Pricing strategy of environmental sustainable supply chain with internalizing externalities

Author

Listed:
  • Ding, Huiping
  • Zhao, Qilan
  • An, Zhirong
  • Xu, Jia
  • Liu, Qian

Abstract

The negative impact of business activities on resources and sustainability include pollution and environmental externalities, which are becoming more severe and attracting worldwide attention. This study investigates a mechanism for motivating supply chain members to collaboratively produce environmentally friendly products (EFPs), with an investment in pollution reduction and prevention and by considering environmental regulations and incentive policies From the perspective of supply chain members, we focus on studying optimal pricing strategies for environmentally sustainable supply chains and the relationship between firm performance and environmental policy incentives. By treating the EFP as an investment project, its economic feasibility can be evaluated in the context of the supply chain. Unlike traditional supply chain models, in our model, government policy incentives are shared within the supply chain through transfer price negotiations between manufacturers and suppliers. This study addresses the impact of government policy incentives on value transition and profit allotment in the collaborative supply chain system.

Suggested Citation

  • Ding, Huiping & Zhao, Qilan & An, Zhirong & Xu, Jia & Liu, Qian, 2015. "Pricing strategy of environmental sustainable supply chain with internalizing externalities," International Journal of Production Economics, Elsevier, vol. 170(PB), pages 563-575.
    • Handle: RePEc:eee:proeco:v:170:y:2015:i:pb:p:563-575
    DOI: 10.1016/j.ijpe.2015.05.016
    as

    Download full text from publisher

    File URL: http://www.sciencedirect.com/science/article/pii/S0925527315001681
    Download Restriction: Full text for ScienceDirect subscribers only
    File URL: https://libkey.io/10.1016/j.ijpe.2015.05.016?utm_source=ideas
    LibKey link: if access is restricted and if your library uses this service, LibKey will redirect you to where you can use your library subscription to access this item
    ---><---

    As the access to this document is restricted, you may want to search for a different version of it.

    References listed on IDEAS

    as
    1. Rubinstein, Ariel, 1982. "Perfect Equilibrium in a Bargaining Model," Econometrica, Econometric Society, vol. 50(1), pages 97-109, January.
    2. Vermeulen, W.J.V. & Kok, M.T.J., 2012. "Government interventions in sustainable supply chain governance: Experience in Dutch front-running cases," Ecological Economics, Elsevier, vol. 83(C), pages 183-196.
    3. Nagarajan, Mahesh & Sosic, Greys, 2008. "Game-theoretic analysis of cooperation among supply chain agents: Review and extensions," European Journal of Operational Research, Elsevier, vol. 187(3), pages 719-745, June.
    4. Chen, Yenming J. & Sheu, Jiuh-Biing, 2009. "Environmental-regulation pricing strategies for green supply chain management," Transportation Research Part E: Logistics and Transportation Review, Elsevier, vol. 45(5), pages 667-677, September.
    5. Giannoccaro, Ilaria & Pontrandolfo, Pierpaolo, 2004. "Supply chain coordination by revenue sharing contracts," International Journal of Production Economics, Elsevier, vol. 89(2), pages 131-139, May.
    6. R. H. Coase, 2013. "The Problem of Social Cost," Journal of Law and Economics, University of Chicago Press, vol. 56(4), pages 837-877.
    7. Hsueh, Che-Fu, 2014. "Improving corporate social responsibility in a supply chain through a new revenue sharing contract," International Journal of Production Economics, Elsevier, vol. 151(C), pages 214-222.
    8. Mitra, Supriya & Webster, Scott, 2008. "Competition in remanufacturing and the effects of government subsidies," International Journal of Production Economics, Elsevier, vol. 111(2), pages 287-298, February.
    9. Cai, Gangshu (George) & Zhang, Zhe George & Zhang, Michael, 2009. "Game theoretical perspectives on dual-channel supply chain competition with price discounts and pricing schemes," International Journal of Production Economics, Elsevier, vol. 117(1), pages 80-96, January.
    10. Longo, Alberto & Markandya, Anil & Petrucci, Marta, 2008. "The internalization of externalities in the production of electricity: Willingness to pay for the attributes of a policy for renewable energy," Ecological Economics, Elsevier, vol. 67(1), pages 140-152, August.
    11. Nguyen, Khanh Q., 2008. "Internalizing externalities into capacity expansion planning: The case of electricity in Vietnam," Energy, Elsevier, vol. 33(5), pages 740-746.
    12. Holmgren, Kristina & Amiri, Shahnaz, 2007. "Internalising external costs of electricity and heat production in a municipal energy system," Energy Policy, Elsevier, vol. 35(10), pages 5242-5253, October.
    13. Chauhan, Satyaveer S. & Proth, Jean-Marie, 2005. "Analysis of a supply chain partnership with revenue sharing," International Journal of Production Economics, Elsevier, vol. 97(1), pages 44-51, July.
    14. Vachon, Stephan & Klassen, Robert D., 2008. "Environmental management and manufacturing performance: The role of collaboration in the supply chain," International Journal of Production Economics, Elsevier, vol. 111(2), pages 299-315, February.
    15. Chaabane, A. & Ramudhin, A. & Paquet, M., 2012. "Design of sustainable supply chains under the emission trading scheme," International Journal of Production Economics, Elsevier, vol. 135(1), pages 37-49.
    16. Kosugi, Takanobu & Tokimatsu, Koji & Kurosawa, Atsushi & Itsubo, Norihiro & Yagita, Hiroshi & Sakagami, Masaji, 2009. "Internalization of the external costs of global environmental damage in an integrated assessment model," Energy Policy, Elsevier, vol. 37(7), pages 2664-2678, July.
    17. Cai, Gangshu (George) & Chiang, Wen-Chyuan & Chen, Xiangfeng, 2011. "Game theoretic pricing and ordering decisions with partial lost sales in two-stage supply chains," International Journal of Production Economics, Elsevier, vol. 130(2), pages 175-185, April.
    Full references (including those not matched with items on IDEAS)

    Citations

    Citations are extracted by the CitEc Project, subscribe to its RSS feed for this item.
    as


    Cited by:

    1. Panda, S. & Modak, N.M. & Basu, M. & Goyal, S.K., 2015. "Channel coordination and profit distribution in a social responsible three-layer supply chain," International Journal of Production Economics, Elsevier, vol. 168(C), pages 224-233.
    2. Piera Centobelli & Roberto Cerchione & Emilio Esposito, 2018. "Environmental Sustainability and Energy-Efficient Supply Chain Management: A Review of Research Trends and Proposed Guidelines," Energies, MDPI, vol. 11(2), pages 1-36, January.
    3. Dongwook Kim & Sungbum Kim, 2017. "Sustainable Supply Chain Based on News Articles and Sustainability Reports: Text Mining with Leximancer and DICTION," Sustainability, MDPI, vol. 9(6), pages 1-44, June.
    4. Tajbakhsh, Alireza & Hassini, Elkafi, 2022. "A game-theoretic approach for pollution control initiatives," International Journal of Production Economics, Elsevier, vol. 254(C).
    5. Xuan Zhao & Benhong Peng & Chaoyu Zheng & Anxia Wan, 2022. "Closed-loop supply chain pricing strategy for electric vehicle batteries recycling in China," Environment, Development and Sustainability: A Multidisciplinary Approach to the Theory and Practice of Sustainable Development, Springer, vol. 24(6), pages 7725-7752, June.
    6. Ding, Huiping & Wang, Li & Zheng, Lucy, 2018. "Collaborative mechanism on profit allotment and public health for a sustainable supply chain," European Journal of Operational Research, Elsevier, vol. 267(2), pages 478-495.
    7. Katalin Hartung, 2017. "Optimal Resource Allocation at the Blue Economy Type of Firms," Financial and Economic Review, Magyar Nemzeti Bank (Central Bank of Hungary), vol. 16(3), pages 98-118.
    8. Yantao Ling & Jing Xu, 2021. "Price and greenness competition between duopoly firms considering consumer premium payments," Environment, Development and Sustainability: A Multidisciplinary Approach to the Theory and Practice of Sustainable Development, Springer, vol. 23(3), pages 3853-3880, March.
    9. Neda Dabaghian & Reza Tavakkoli-Moghaddam & Ata Allah Taleizadeh & Mohammad Sadegh Moshtagh, 2022. "Channel coordination and profit distribution in a three-echelon supply chain considering social responsibility and product returns," Environment, Development and Sustainability: A Multidisciplinary Approach to the Theory and Practice of Sustainable Development, Springer, vol. 24(3), pages 3165-3197, March.
    10. Martinez-Valencia, Lina & Garcia-Perez, Manuel & Wolcott, Michael P., 2021. "Supply chain configuration of sustainable aviation fuel: Review, challenges, and pathways for including environmental and social benefits," Renewable and Sustainable Energy Reviews, Elsevier, vol. 152(C).
    11. Marco Bertoni, 2017. "Introducing Sustainability in Value Models to Support Design Decision Making: A Systematic Review," Sustainability, MDPI, vol. 9(6), pages 1-31, June.
    12. Rebeca B. Sánchez-Flores & Samantha E. Cruz-Sotelo & Sara Ojeda-Benitez & Ma. Elizabeth Ramírez-Barreto, 2020. "Sustainable Supply Chain Management—A Literature Review on Emerging Economies," Sustainability, MDPI, vol. 12(17), pages 1-27, August.

    Most related items

    These are the items that most often cite the same works as this one and are cited by the same works as this one.
    1. Liu, Qian & Zheng, Lucy, 2016. "Assessing the economic performance of an environmental sustainable supply chain in reducing environmental externalitiesAuthor-Name: Ding, Huiping," European Journal of Operational Research, Elsevier, vol. 255(2), pages 463-480.
    2. Ding, Huiping & Wang, Li & Zheng, Lucy, 2018. "Collaborative mechanism on profit allotment and public health for a sustainable supply chain," European Journal of Operational Research, Elsevier, vol. 267(2), pages 478-495.
    3. Ding, Huiping & Zhao, Qilan & An, Zhirong & Tang, Ou, 2016. "Collaborative mechanism of a sustainable supply chain with environmental constraints and carbon caps," International Journal of Production Economics, Elsevier, vol. 181(PA), pages 191-207.
    4. Matsui, Kenji, 2020. "Optimal bargaining timing of a wholesale price for a manufacturer with a retailer in a dual-channel supply chain," European Journal of Operational Research, Elsevier, vol. 287(1), pages 225-236.
    5. Ghosh, Debabrata & Shah, Janat, 2012. "A comparative analysis of greening policies across supply chain structures," International Journal of Production Economics, Elsevier, vol. 135(2), pages 568-583.
    6. William S. Lovejoy, 2010. "Bargaining Chains," Management Science, INFORMS, vol. 56(12), pages 2282-2301, December.
    7. Ghosh, Debabrata & Shah, Janat, 2015. "Supply chain analysis under green sensitive consumer demand and cost sharing contract," International Journal of Production Economics, Elsevier, vol. 164(C), pages 319-329.
    8. Kudełko, Mariusz, 2021. "Modeling of Polish energy sector – tool specification and results," Energy, Elsevier, vol. 215(PA).
    9. Lukas, Elmar & Welling, Andreas, 2014. "Timing and eco(nomic) efficiency of climate-friendly investments in supply chains," European Journal of Operational Research, Elsevier, vol. 233(2), pages 448-457.
    10. Élodie Bertrand, 2006. "La thèse d'efficience du « théorème de Coase ». Quelle critique de la microéconomie ?," Revue économique, Presses de Sciences-Po, vol. 57(5), pages 983-1007.
    11. Scharpf, Fritz W. & Mohr, Matthias, 1994. "Efficient self-coordination in policy networks: A simulation study," MPIfG Discussion Paper 94/1, Max Planck Institute for the Study of Societies.
    12. Hafezalkotob, Ashkan, 2017. "Competition of domestic manufacturer and foreign supplier under sustainable development objectives of government," Applied Mathematics and Computation, Elsevier, vol. 292(C), pages 294-308.
    13. Thoron, Sylvie & Sol, Emmanuel & Willinger, Marc, 2009. "Do binding agreements solve the social dilemma?," Journal of Public Economics, Elsevier, vol. 93(11-12), pages 1271-1282, December.
    14. Alain‐Désiré Nimubona & Jean‐Christophe Pereau, 2022. "Negotiating over payments for wetland ecosystem services," Canadian Journal of Economics/Revue canadienne d'économique, John Wiley & Sons, vol. 55(3), pages 1507-1538, August.
    15. Xinjian Wu & Chao Yu, 2021. "Decision and coordination of low-carbon supply chain under the trend of new retailing [Game theoretical perspectives on dual-channel supply chain competition with price discounts and pricing scheme," International Journal of Low-Carbon Technologies, Oxford University Press, vol. 16(4), pages 1187-1201.
    16. Joalland, Olivier & Pereau, Jean-Christophe & Rambonilaza, Tina, 2019. "Bargaining local compensation payments for the installation of new power transmission lines," Energy Economics, Elsevier, vol. 80(C), pages 75-85.
    17. Eric T. Anderson, 2002. "Sharing the Wealth: When Should Firms Treat Customers as Partners?," Management Science, INFORMS, vol. 48(8), pages 955-971, August.
    18. Kumar, Patanjal & Baraiya, Rajendra & Das, Debashree & Jakhar, Suresh Kumar & Xu, Lei & Mangla, Sachin Kumar, 2021. "Social responsibility and cost-learning in dyadic supply chain coordination," Transportation Research Part E: Logistics and Transportation Review, Elsevier, vol. 156(C).
    19. Koji Tokimatsu & Louis Dupuy & Nick Hanley, 2019. "Using Genuine Savings for Climate Policy Evaluation with an Integrated Assessment Model," Environmental & Resource Economics, Springer;European Association of Environmental and Resource Economists, vol. 72(1), pages 281-307, January.
    20. Nematollahi, Mohammadreza & Hosseini-Motlagh, Seyyed-Mahdi & Heydari, Jafar, 2017. "Coordination of social responsibility and order quantity in a two-echelon supply chain: A collaborative decision-making perspective," International Journal of Production Economics, Elsevier, vol. 184(C), pages 107-121.

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:eee:proeco:v:170:y:2015:i:pb:p:563-575. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a bibliographic reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: Catherine Liu (email available below). General contact details of provider: http://www.elsevier.com/locate/ijpe .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.