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Optimal Pricing Decisions for a Low-Carbon Supply Chain Considering Fairness Concern under Carbon Quota Policy

Author

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  • Hao Zou

    (School of Traffic and Transportation Engineering, Central South University, Changsha 410075, China
    School of Business Administration, Hunan University of Finance and Economics, Changsha 410205, China)

  • Jin Qin

    (School of Traffic and Transportation Engineering, Central South University, Changsha 410075, China)

  • Bo Dai

    (School of Management, Hunan University of Technology and Business, Changsha 410205, China
    Laboratoire d’optimisation des Systeme Industriels, Institut Charles Delaunay, Universite de Technologie de Troyes, 10010 Troyes, France)

Abstract

This research investigates the effect of fairness concerns on a sustainable low-carbon supply chain (LCSC) with a carbon quota policy, in which a manufacturer is in charge of manufacturing low-carbon products and sells them to a retailer. The demand is affected by price and the carbon emission reduction rate. The optimal decisions of pricing and carbon emission reduction rate are analyzed under four decision models: (i) centralized decision, (ii) decentralized decision without fairness concern, (iii) decentralized decision with manufacturer’s fairness concern, (iv) decentralized decision with retailer’s fairness concern. The results indicate that the profits in the centralized LCSC are higher than those in the decentralized LCSC with fairness concern. If a manufacturer pays close attention to fairness, the fairness concern coefficient will reduce the carbon emission reduction rate and the profit of the LCSC and increase the wholesale price and the retail price of the product. If a retailer pays close attention to fairness, and the preference of consumers for a low-carbon product is low, the fairness concern coefficient of the retailer increases the total profit of the LCSC and decreases the carbon emission reduction rate and retail price of the product. Otherwise, if the preference of consumers for a low-carbon product is great, the fairness concern coefficient of the retailer would lead to a lower retail price compared with the retail price in the centralized decision and decrease the total profit of the LCSC.

Suggested Citation

  • Hao Zou & Jin Qin & Bo Dai, 2021. "Optimal Pricing Decisions for a Low-Carbon Supply Chain Considering Fairness Concern under Carbon Quota Policy," IJERPH, MDPI, vol. 18(2), pages 1-21, January.
    • Handle: RePEc:gam:jijerp:v:18:y:2021:i:2:p:556-:d:478423
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    2. Qiuyue Li & Hao Wang & Zhenshan Li & Shangwei Yuan, 2022. "A Comparative Study of the Effect of Different Carbon-Reduction Policies on Outsourcing Remanufacturing," IJERPH, MDPI, vol. 19(6), pages 1-22, March.
    3. Yanhong Yuan & Yaru Zhang & Lei Wang & Li Wang, 2022. "Coping Decisions of Production Enterprises under Low-Carbon Economy," Sustainability, MDPI, vol. 14(15), pages 1-21, August.
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    5. Qiangfei Chai & Yiming Li & Zhongdong Xiao & Kee-hung Lai, 2022. "Optimal Carbon Abatement Strategy for Manufacturers under Cap-and-Trade," IJERPH, MDPI, vol. 19(17), pages 1-21, September.

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