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Pricing and investment in manufacturing and logistics when environmental reputation matters

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  • Parilina, Elena
  • Yao, Fanjun
  • Zaccour, Georges

Abstract

We consider pricing and manufacturing and logistics investment decisions by a manufacturer facing environmentally concerned consumers. Demand depends on the price and manufacturer’s environmental performance comparatively to the industry. As environmental reputation can only be built over time and emissions reduction capacity requires sustainable investments in manufacturing and logistics processes over time, our model is dynamic. The planning horizon is divided into two stages, with the endogenously determined switching time between the two happening when a predefined capacity threshold is reached. We characterize the optimal decisions in both stages and provide a series of numerical illustrations varying the model’s parameter values.

Suggested Citation

  • Parilina, Elena & Yao, Fanjun & Zaccour, Georges, 2024. "Pricing and investment in manufacturing and logistics when environmental reputation matters," Transportation Research Part E: Logistics and Transportation Review, Elsevier, vol. 184(C).
    • Handle: RePEc:eee:transe:v:184:y:2024:i:c:s1366554524000589
    DOI: 10.1016/j.tre.2024.103468
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