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Green Technology Investment in a Decentralized Supply Chain under Demand Uncertainty

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  • Cong Wang

    (School of Maritime Economics and Management, Dalian Maritime University, Dalian 116026, China
    School of Economics and Management, Southeast University, Nanjing 211189, China)

  • Zongbao Zou

    (Business School, Shantou University, Shantou 515063, China
    Guangdong-Taiwan Enterprise Cooperation Research Institute of Shantou University, Shantou University, Shantou 515063, China)

  • Shidao Geng

    (School of Maritime Economics and Management, Dalian Maritime University, Dalian 116026, China)

Abstract

Green technology investment is an important factor that influences the sustainability and performance of the supply chain. In this paper, we use the game-theoretic approach, which is quite suitable to operation decision research, to model a supply chain consisting of one supplier and one retailer and discuss who should invest in green technology in a decentralized supply chain under demand uncertainty. An important result we found is that the retailer has a stronger investment motivation and higher investment efficiency compared to the supplier. The retailer also tends to invest in green technology himself when customers are not so sensitive to the product’s retail price. We analyze the supply chain sustainability, and find that high levels of green technology investments are not always necessarily good for environmental sustainability, it depends on the environmental impact’s sensitivity to green technology. Lastly, a joint investment mechanism is designed to induce the retailer to join in the green technology investment when he has no investment intention, and that realizes a Pareto improvement of the supply chain. Based on the results, we recommend designing more incentive mechanisms to induce the retailers to join in the green technology investment according to supply chain conditions.

Suggested Citation

  • Cong Wang & Zongbao Zou & Shidao Geng, 2021. "Green Technology Investment in a Decentralized Supply Chain under Demand Uncertainty," Sustainability, MDPI, vol. 13(7), pages 1-25, March.
    • Handle: RePEc:gam:jsusta:v:13:y:2021:i:7:p:3752-:d:525426
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    3. Chaonan Li & Tianyi Guo & Yan Chen, 2022. "Robust Emission Reduction Strategies under Cap-and-Trade and Demand Uncertainty," Sustainability, MDPI, vol. 14(20), pages 1-27, October.

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