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Pollution Accumulation and Abatement Policy in a Supply Chain

Author

Listed:
  • Fouad Ouardighi

    (ESSEC Business School)

  • Jeong Eun Sim

    (University of British Columbia)

  • Bowon Kim

    (KAIST Business School)

Abstract

This paper seeks to determine how the double marginalization phenomenon affects the tradeoff between polluting emissions and abatement activities related to pollution accumulation in a supply chain composed of one manufacturer and one retailer. The environmental consequence of this inefficiency, which emerges in a noncooperative vertical setting governed by a single-parameter contract, is overlooked in the literature on pollution control. In the setup of a two-stage game, we investigate the impact of double marginalization for noncooperative equilibrium. To check whether there are differences between the dynamic and strategic effects of double marginalization on pollution accumulation, both the open-loop and feedback Nash equilibria are derived over a finite time horizon, with the cooperative solution as a benchmark.

Suggested Citation

  • Fouad Ouardighi & Jeong Eun Sim & Bowon Kim, 2025. "Pollution Accumulation and Abatement Policy in a Supply Chain," Lecture Notes in Operations Research,, Springer.
    • Handle: RePEc:spr:lnopch:978-3-031-78227-5_5
    DOI: 10.1007/978-3-031-78227-5_5
    as

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