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Sustainability investment in maritime supply chain with risk behavior and information sharing

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  • Lai, Xiaofan
  • Tao, Yi
  • Wang, Fan
  • Zou, Zongbao

Abstract

To comply with the stricter emission control regulations of recent years, shipping carriers, who may be risk averse, need to make decisions regarding their investments in environmental sustainability before market uncertainty is realized. The ports, as service providers of the carriers, may help the carriers on making such decisions through sharing market forecast information. In this study, we aim to examine the incentives of forecast information sharing from port and the effect of carrier's risk behavior on such sustainability investment decisions in a maritime supply chain. For this, we propose a two-period game-theoretic model framework. In this framework, both the port and the carrier face market uncertainty during the first period. The port determines whether to share its market forecast information with the carrier, and the carrier needs to decide her sustainability investment level. Then, in the second period, the port determines the service fee, and the carrier determines the freight rate to the customers. We analyze four different scenarios, based on the types of carrier's risk behavior and on whether the port decides to share the forecast information.

Suggested Citation

  • Lai, Xiaofan & Tao, Yi & Wang, Fan & Zou, Zongbao, 2019. "Sustainability investment in maritime supply chain with risk behavior and information sharing," International Journal of Production Economics, Elsevier, vol. 218(C), pages 16-29.
    • Handle: RePEc:eee:proeco:v:218:y:2019:i:c:p:16-29
    DOI: 10.1016/j.ijpe.2019.02.021
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