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A Game Theoretic Approach for Improving Environmental and Economic Performance in a Dual-Channel Green Supply Chain

Author

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  • Weimin Ma

    (School of Economics and Management, Tongji University, Shanghai 200092, China
    These authors contributed equally to this work.)

  • Zhengrong Cheng

    (School of Economics and Management, Tongji University, Shanghai 200092, China
    These authors contributed equally to this work.)

  • Shiwei Xu

    (School of Economics and Management, Tongji University, Shanghai 200092, China)

Abstract

In this paper, we investigate economic performance and environmental performance of a dual-channel green supply chain (GSC). Given that most relevant literature still focus on the descriptive aspect of GSC, we adopt game theoretic approach rather than qualitative analysis method to address the following problems: (1) How can the integration of environmental and economic sustainability goals be achieved in GSC? (2) What is the impact of customer environmental awareness on the green level and profitability of the GSC? (3) How does the market demand changes in the presence of the online direct channel in addition to the traditional one? We establish four game models, which are decentralized scenario, centralized scenario, retailer-led revenue-sharing scenario and bargaining revenue-sharing scenario. In the decentralized scenario, participants in a GSC make individual decisions based on their specific interests. In the centralized scenario, the GSC is regarded as a whole and the participants make collective decisions to maximize the overall profit of the GSC. In addition, in the two revenue-sharing scenarios, revenue-sharing contracts as the important profit coordination systems are set up and the revenue-sharing ratio is determined either by the retailer or through bargaining. Moreover, the cost of green product research and development, customer environmental awareness and price sensitivity are also taken into account in the four scenarios. By comparing and analyzing the four game models, we recommend the two revenue-sharing scenarios as the optimum choice and improving green awareness as a feasible strategy to achieve the integration of economic and environmental goals of the GSC. Additionally, we find that online sales has become a major distribution channel of the GSC.

Suggested Citation

  • Weimin Ma & Zhengrong Cheng & Shiwei Xu, 2018. "A Game Theoretic Approach for Improving Environmental and Economic Performance in a Dual-Channel Green Supply Chain," Sustainability, MDPI, vol. 10(6), pages 1-18, June.
    • Handle: RePEc:gam:jsusta:v:10:y:2018:i:6:p:1918-:d:151343
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    References listed on IDEAS

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    Cited by:

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    4. Li Cui & Siwei Guo & Hao Zhang, 2020. "Coordinating a Green Agri-Food Supply Chain with Revenue-Sharing Contracts Considering Retailers’ Green Marketing Efforts," Sustainability, MDPI, vol. 12(4), pages 1-16, February.
    5. Haiping Ren & Rui Chen, 2023. "Porcelain Supply Chain Coordination Considering the Preferences of Consumers against the Background of E-Commerce," Sustainability, MDPI, vol. 15(13), pages 1-19, June.
    6. Francesco Galati & Barbara Bigliardi & Alberto Petroni & Claudia Pinna & Monica Rossi & Sergio Terzi, 2019. "Sustainable Product Lifecycle: The Role of ICT," Sustainability, MDPI, vol. 11(24), pages 1-4, December.
    7. Qifan Hu & Bing Xu, 2019. "Differential Game Analysis of Optimal Strategies and Cooperation in Omni-Channel Organic Agricultural Supply Chain," Sustainability, MDPI, vol. 11(3), pages 1-34, February.

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