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The optimal sales format for green products considering downstream investment

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  • Jing Wang
  • Yingchen Yan
  • Huibin Du
  • Ruiqing Zhao

Abstract

With the increasing public awareness of environmental protection and the popularisation of suppliers' green production, a growing number of e-tailers are also investing in green products or services. The greenization of an e-tailer brings additional sales to the online channel but weakens the bargaining power of the supplier and further complicates the supplier's online channel format choice. This study focuses on the interaction between the e-tailer's green investment strategy and the supplier's choice of online channel format. First, we find that the e-tailer's investment forces the supplier to consider a new factor, the supplier's investment efficiency, which the supplier does not consider when the e-tailer does not invest and completely changes the e-tailer's own preferences. Second, we obtain the counterintuitive result that the supplier does not always benefit from the e-tailer's greenization; in the reseller channel, a supplier with a high investment efficiency is made worse off due to the increased retail price resulting from the e-tailer's investment. Additionally, the e-tailer will go green only when the upstream investment efficiency is high, regardless of the online channel format. The intuition behind this result hinges on each player wanting to free ride but worrying that the other has the same idea.

Suggested Citation

  • Jing Wang & Yingchen Yan & Huibin Du & Ruiqing Zhao, 2020. "The optimal sales format for green products considering downstream investment," International Journal of Production Research, Taylor & Francis Journals, vol. 58(4), pages 1107-1126, February.
    • Handle: RePEc:taf:tprsxx:v:58:y:2020:i:4:p:1107-1126
    DOI: 10.1080/00207543.2019.1612963
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    Citations

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    Cited by:

    1. Matsui, Kenji, 2020. "Optimal bargaining timing of a wholesale price for a manufacturer with a retailer in a dual-channel supply chain," European Journal of Operational Research, Elsevier, vol. 287(1), pages 225-236.
    2. Li Liu & Zhe Wang & Zhao Song & Zaisheng Zhang, 2023. "Evolutionary game analysis on behavioral strategies of four participants in green technology innovation system," Managerial and Decision Economics, John Wiley & Sons, Ltd., vol. 44(2), pages 960-977, March.
    3. Li, Guo & Wu, Huamin & Sethi, Suresh P. & Zhang, Xiang, 2021. "Contracting green product supply chains considering marketing efforts in the circular economy era," International Journal of Production Economics, Elsevier, vol. 234(C).
    4. Wang, Lisha & Chen, Jing & Song, Huaming, 2021. "Marketplace or reseller? Platform strategy in the presence of customer returns," Transportation Research Part E: Logistics and Transportation Review, Elsevier, vol. 153(C).
    5. Taiguang Gao & Kui Wang & Yali Mei & Shan He & Yanfang Wang, 2022. "Supply Chain Pricing Models Considering Risk Attitudes under Free-Riding Behavior," Mathematics, MDPI, vol. 10(10), pages 1-22, May.
    6. Jinjin Liu & Hua Ke & Yuan Gao, 2022. "Manufacturer’s R &D cooperation contract: linear fee or revenue-sharing payment in a low-carbon supply chain," Annals of Operations Research, Springer, vol. 318(1), pages 323-355, November.
    7. Xu, Xiaoping & Zhang, Mian & He, Ping, 2020. "Coordination of a supply chain with online platform considering delivery time decision," Transportation Research Part E: Logistics and Transportation Review, Elsevier, vol. 141(C).
    8. Du, Heng & Lu, Ke, 2023. "Visualization service investment strategies for a self-operated fresh agricultural product e-tailer," Journal of Retailing and Consumer Services, Elsevier, vol. 75(C).
    9. Luo, Huajiang & Zhong, Ling & Nie, Jiajia, 2022. "Quality and distribution channel selection on a hybrid platform," Transportation Research Part E: Logistics and Transportation Review, Elsevier, vol. 163(C).
    10. Qiaoke Zhang & Hongzhuan Chen & Liangqi Wan, 2022. "Reselling or agency model under markdown pricing policy in the presence of strategic customers," Managerial and Decision Economics, John Wiley & Sons, Ltd., vol. 43(7), pages 2911-2923, October.
    11. Xu, Xiaoping & He, Ping & Zhang, Shanshan, 2021. "Channel addition from marketplace or reselling under regional carbon cap-and-trade regulation," International Journal of Production Economics, Elsevier, vol. 236(C).
    12. Chunyu Li & Peng Xing & Yanting Li, 2022. "Sustainable Strategy Analysis: Platform Channel Configuration and Slotting Fee Design under Differentiated Quality Investment," Sustainability, MDPI, vol. 14(23), pages 1-28, December.
    13. Zheng, Zhijun & Li, Gang & Cheng, T.C.E & Wu, Feng, 2022. "Offline supplementary service strategies for the online marketplace: Third-party service or marketplace service?," Transportation Research Part E: Logistics and Transportation Review, Elsevier, vol. 164(C).

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