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The Low-Carbon Supply Chain Coordination Problem with Consumers’ Low-Carbon Preference

Author

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  • Dan Wu

    (College of Economics and Management, China Jiliang University, Hangzhou 310018, China)

  • Yuxiang Yang

    (College of Economics and Management, China Jiliang University, Hangzhou 310018, China)

Abstract

In this paper, we study the supply chain coordination problem between a manufacturer and a retailer regarding consumers’ low-carbon preferences. The retailer considers the market demand to determine the order quantity; the manufacturer chooses how to reduce emissions according to the retailer’s order quantity. We consider four cases, including the non-emission abatement, the emission abatement of decentralized decision-making, the centralized decision-making and the retailer providing a cost-sharing contract. By comparing the four cases, we find that the case of a retailer providing a cost-sharing contract can coordinate the supply chain, achieving a Pareto improvement for the manufacturer and retailer. In addition, we use the Rubinstein bargaining model to determine the cost-sharing ratio. Finally, numerical simulations are given to analyze the impact of the cost-sharing ratio on the equilibrium results, including the profit and the emission abatement level. Furthermore, we investigate the impact of the cost-sharing ratio and consumers’ low-carbon awareness on the profits of the members in the supply chain. We find that the equilibrium results, including the order quantity, the emission abatement level and the profits of the members in the supply chain under contract, are higher than the ones under centralized decision-making. The results show that in the higher low-carbon awareness market, retailers should formulate a reasonable cost-sharing ratio to achieve emission reduction coordination.

Suggested Citation

  • Dan Wu & Yuxiang Yang, 2020. "The Low-Carbon Supply Chain Coordination Problem with Consumers’ Low-Carbon Preference," Sustainability, MDPI, vol. 12(9), pages 1-15, April.
    • Handle: RePEc:gam:jsusta:v:12:y:2020:i:9:p:3591-:d:351635
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    References listed on IDEAS

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    Cited by:

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    2. Hanbo Wu & Yaxin Sun & Yutong Su & Ming Chen & Hongxia Zhao & Qi Li, 2022. "Which Is the Best Supply Chain Policy: Carbon Tax, or a Low-Carbon Subsidy?," Sustainability, MDPI, vol. 14(10), pages 1-20, May.
    3. Longfei He & Baiyun Yuan & Junsong Bian & Kin Keung Lai, 2023. "Differential game theoretic analysis of the dynamic emission abatement in low-carbon supply chains," Annals of Operations Research, Springer, vol. 324(1), pages 355-393, May.
    4. Haodong Chen & Hengyi Zhang & Eias Al Humdan & Mohammed Alharithi & Yu Gong, 2023. "Research on Multi-Channel Supply Chain Decisions Considering Carbon Emission Cost and Consumer Loyalty," Sustainability, MDPI, vol. 15(14), pages 1-28, July.
    5. Xinghua Wu & Sihuan Li, 2022. "Impacts of CSR Undertaking Modes on Technological Innovation and Carbon-Emission-Reduction Decisions of Supply Chain," Sustainability, MDPI, vol. 14(20), pages 1-25, October.
    6. Hao Zou & Jin Qin & Xiaofeng Long, 2022. "Coordination Decisions for a Low-Carbon Supply Chain Considering Risk Aversion under Carbon Quota Policy," IJERPH, MDPI, vol. 19(5), pages 1-24, February.

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