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Green Supply Chain Decisions Under Different Power Structures: Wholesale Price vs. Revenue Sharing Contract

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  • Xiaojing Liu

    (Business School, Jiangsu Normal University, Xuzhou 221116, China)

  • Wenyi Du

    (Business School, Jiangsu Normal University, Xuzhou 221116, China
    Management Science Institute, Hohai University, Nanjing 211100, China)

  • Yijie Sun

    (Business School, Jiangsu Normal University, Xuzhou 221116, China)

Abstract

In the market, once consumers have a low-carbon preference, they will choose green low-carbon products. The market demand for green products is not only related to product price, but also consumers’ low-carbon preference. In this way, enterprise has to consider the cost of carbon emissions in the process of production and operation. In this paper, we consider a two-level supply chain system composed of a manufacturer and a retailer. The supply chain system can determine the price of products and the level of carbon emission reduction through different supply chain contracts: wholesale price contract and revenue sharing contract. However, the power control structure of a manufacturer and a retailer is different, which will further affect the decision-making strategy of the supply chain system. We set up four models (Wholesale Price—NM and NR, and Revenue-Sharing—SR and SM) of the supply chain with carbon emission reduction, and calculated and analyzed. The results show that firstly, regardless of whether the manufacturer’s power control structure or the retailer power structure is dominant, the manufacturer wholesale price with a contract on revenue-sharing is always higher than on wholesale price, and it is inversely proportional to the revenue-sharing proportion. Secondly, under the two power control structures, the carbon emission level of the manufacturer with a contract on revenue-sharing is always lower than on wholesale price, and it gradually decreases with the increase of the revenue-sharing proportion of the manufacturers. Thirdly, when the retailer dominates the supply chain, the retailer selling price with a contract on revenue-sharing is always higher than on wholesale price. Under the manufacturer’s power control structure, when the revenue-sharing ratio is small, the retailer selling price with a contract on revenue-sharing is higher than on wholesale price; when the revenue-sharing ratio is large, the retailer selling price with a contract on revenue-sharing is lower than on wholesale price. Finally, the validity of the model is verified by an example, and the sensitivity of the parameters is analyzed.

Suggested Citation

  • Xiaojing Liu & Wenyi Du & Yijie Sun, 2020. "Green Supply Chain Decisions Under Different Power Structures: Wholesale Price vs. Revenue Sharing Contract," IJERPH, MDPI, vol. 17(21), pages 1-18, October.
    • Handle: RePEc:gam:jijerp:v:17:y:2020:i:21:p:7737-:d:433298
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    References listed on IDEAS

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    1. Shizhen Bai & Xuelian Jia, 2023. "The Impact of the Cost-Sharing Contract on Capital-Constrained Agricultural Supply Chains," SAGE Open, , vol. 13(1), pages 21582440231, February.
    2. Rubi Das & Abhijit Barman & Balaji Roy & Pijus Kanti De, 2023. "Pricing and greening strategies in a dual-channel supply chain with cost and profit sharing contracts," Environment, Development and Sustainability: A Multidisciplinary Approach to the Theory and Practice of Sustainable Development, Springer, vol. 25(6), pages 5053-5086, June.
    3. Fayu Chen & Jinhao Liu & Xiaoyu Liu & Hua Zhang, 2023. "Static and Dynamic Evaluation of Financing Efficiency in Enterprises’ Low-Carbon Supply Chain: PCA–DEA–Malmquist Model Method," Sustainability, MDPI, vol. 15(3), pages 1-17, January.
    4. Bo Yan & Yanping Liu & Zijie Jin, 2023. "Joint coordination contract for capital‐constrained supply chains under asymmetric information," Managerial and Decision Economics, John Wiley & Sons, Ltd., vol. 44(1), pages 251-270, January.

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