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Joint Decisions on Emission Reduction and Inventory Replenishment with Overconfidence and Low-Carbon Preference

Author

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  • Shoufeng Ji

    (School of Business Administration, Northeastern University, Shenyang 110167, China)

  • Dan Zhao

    (School of Business Administration, Northeastern University, Shenyang 110167, China)

  • Xiaoshuai Peng

    (School of Business Administration, Northeastern University, Shenyang 110167, China)

Abstract

This paper presents a game-theoretical analysis of joint decisions on carbon emission reduction and inventory replenishment with overconfidence and consumer’s low-carbon preference for key supply chain players when facing effort-dependent demand. We consider respectively the overconfidence of a supplier who overestimates the impacts of his emission reduction efforts on product demand and the overconfidence of a retailer who underestimates the variability of the stochastic demand. We find, surprisingly, that the supplier’s overconfidence can mitigate “double marginalization” but hurt self-profit, while the retailer’s overconfidence can be an irrelevant factor for self-profit. The retailer aiming at short-term trading should actively seek an overconfident supplier, while the supplier should actively seek a rational retailer for whom the critical fractile is more than 0.5, whereas for an overconfident retailer, the critical fractile is less than or equal to 0.5. The study also underlines the effect of regulation parameters as an important contextual factor influencing low-carbon operations.

Suggested Citation

  • Shoufeng Ji & Dan Zhao & Xiaoshuai Peng, 2018. "Joint Decisions on Emission Reduction and Inventory Replenishment with Overconfidence and Low-Carbon Preference," Sustainability, MDPI, vol. 10(4), pages 1-21, April.
  • Handle: RePEc:gam:jsusta:v:10:y:2018:i:4:p:1119-:d:140162
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    References listed on IDEAS

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    Cited by:

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    3. Bo Dai & Fenfen Li, 2021. "Joint Inventory Replenishment Planning of an E-Commerce Distribution System with Distribution Centers at Producers’ Locations," Logistics, MDPI, vol. 5(3), pages 1-14, July.
    4. Zhang, Juan & Huang, Jian, 2021. "Vehicle product-line strategy under government subsidy programs for electric/hybrid vehicles," Transportation Research Part E: Logistics and Transportation Review, Elsevier, vol. 146(C).
    5. Zhi-Hua Hu & Shu-Wen Wang, 2022. "An Evolutionary Game Model Between Governments and Manufacturers Considering Carbon Taxes, Subsidies, and Consumers’ Low-Carbon Preference," Dynamic Games and Applications, Springer, vol. 12(2), pages 513-551, June.
    6. Changhong Li & Jialuo Wang & Jiao Zheng & Jiani Gao, 2022. "Effects of Carbon Policy on Carbon Emission Reduction in Supply Chain under Uncertain Demand," Sustainability, MDPI, vol. 14(9), pages 1-20, May.
    7. Jia Wang & Xijia Huang, 2018. "The Optimal Carbon Reduction and Return Strategies under Carbon Tax Policy," Sustainability, MDPI, vol. 10(7), pages 1-14, July.
    8. Doo-Ho Lee & Jong-Chul Yoon, 2022. "Decisions on Pricing, Sustainability Effort, and Carbon Cap under Wholesale Price and Cost-Sharing Contracts," Sustainability, MDPI, vol. 14(8), pages 1-21, April.

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