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Green product design in a supply chain with considering marketing under competition and coordination

Author

Listed:
  • Ahmad Fadavi

    (University of Tehran)

  • Fariborz Jolai

    (University of Tehran)

  • Ata Allah Taleizadeh

    (University of Tehran)

Abstract

Environmental sustainability is becoming a leading indicator for evaluating supply chain management. This study considers two players, a manufacturer and a retailer, that offer substitutable products and compete in green and price-sensitive markets. This article studies members’ decisions regarding pricing competition and cooperation (marketing cost sharing) for green products in a vertical supply chain. Furthermore, it investigates the effects of their decisions to obtain an optimal profit on the green products supply chain using the Stackelberg game theory approach under competition. This article studies several new green products structures within a supply chain and researches their environmental performance impact. Environmental responsibilities are explored in a supply chain that consumers are informed about eco-friendly products. The manufacturer decides the wholesale of its products, designing and producing a new green product to maximize its expected profit. The retailer chooses the retail price and amount of effort for green marketing of the products to maximize its expected profit. The results show that cooperation may not always be to the benefit of all partners; therefore, the best strategy for all partners is when an association is not applied. According to the research results, the retailer tends to produce and sell greener products (higher greenness) to maximize profits. At the same time, the manufacturer has to spend more cost to make greener products. The main influential factor for choosing the type of production of green products is market size. If the market size is more than predicted, the best choice for the production of green products is development-intensive green products; conversely, if the market potential is low, marginal cost-intensive green products are the best choice.

Suggested Citation

  • Ahmad Fadavi & Fariborz Jolai & Ata Allah Taleizadeh, 2022. "Green product design in a supply chain with considering marketing under competition and coordination," Environment, Development and Sustainability: A Multidisciplinary Approach to the Theory and Practice of Sustainable Development, Springer, vol. 24(10), pages 11721-11759, October.
    • Handle: RePEc:spr:endesu:v:24:y:2022:i:10:d:10.1007_s10668-021-01917-9
    DOI: 10.1007/s10668-021-01917-9
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    References listed on IDEAS

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