Optimizing pricing strategies in cross-border green supply chains with revenue sharing and flexible exchange rate mechanisms

Managing exchange rate risk is critical for safeguarding the sustainability of global green supply chains, where price volatility, profit variability, and high environmental costs pose significant challenges. This study investigates a cross-border green supply chain consisting of a supplier and a retailer operating under exchange rate uncertainty. To mitigate these risks, we propose a revenue-sharing mechanism integrated with a flexible exchange rate contract. This framework enables the retailer to transfer part of the exchange rate risk to the supplier, thereby achieving both financial and environmental objectives. Our results reveal that the proposed contract significantly improves profitability and enhances product’s greenness level for both parties associated with exchange rate fluctuations. This study contributes by: (1) introducing a novel pricing framework that integrates revenue sharing and exchange rate risk management, extending green supply chain research; (2) developing a pricing strategy based on a flexible exchange rate mechanism, optimizing wholesale and retail pricing under currency fluctuations; and (3) providing actionable insights for firms on mitigating exchange rate risks while promoting sustainability.