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Pollution accumulation and abatement policy in a supply chain

Listed author(s):
  • Ouardighi, Fouad El
  • Sim, Jeong Eun
  • Kim, Bowon
Registered author(s):

    This paper seeks to determine how the double marginalization phenomenon affects the tradeoff between polluting emissions and abatement activities related to pollution accumulation in a supply chain composed of one manufacturer and one retailer. The environmental consequence of this inefficiency, which emerges in a non-cooperative vertical setting governed by a single-parameter contract, is overlooked in the literature on pollution control. In the setup of a two-stage game, we investigate the impact of double marginalization for non-cooperative equilibrium. To check whether there are differences between dynamic and strategic effects of double marginalization on pollution accumulation, both the open-loop and feedback Nash equilibria are derived over a finite time horizon, with the cooperative solution as a benchmark.

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    File URL: http://www.sciencedirect.com/science/article/pii/S0377221715007262
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    Article provided by Elsevier in its journal European Journal of Operational Research.

    Volume (Year): 248 (2016)
    Issue (Month): 3 ()
    Pages: 982-996

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    Handle: RePEc:eee:ejores:v:248:y:2016:i:3:p:982-996
    DOI: 10.1016/j.ejor.2015.08.009
    Contact details of provider: Web page: http://www.elsevier.com/locate/eor

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