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Pollution Accumulation and Abatement Policies in Two Supply Chains Under Vertical and Horizontal Competition and Strategy Types

In: Essays on Pollution Control in Economics and Management Science

Author

Listed:
  • Fouad Ouardighi

    (ESSEC Business School)

  • Jeong Eun Sim

    (University of British Columbia)

  • Bowon Kim

    (KAIST Business School)

Abstract

This research investigates the impact of both horizontal and vertical competition, on the one hand, and strategy types (commitment-based versus contingent-based equilibrium strategies), on the other hand, on the pollution accumulated by two supply chains over time. We consider a two-stage game model where two manufacturers and two retailers are involved in a wholesale price contract, to supply the demand over a finite time horizon. In the first stage of the game, the manufacturers set their respective optimal transfer prices. During the second stage, polluting emissions are created over time in proportion to demand, which is controlled by the retailers’ respective consumer prices. In this stage, the manufacturers are involved in emissions abatement. In this setup, we seek to identify the combination of market structure and strategy type that leads the two supply chains to generate the lowest pollution intensity and the highest level of abatement intensity.

Suggested Citation

  • Fouad Ouardighi & Jeong Eun Sim & Bowon Kim, 2025. "Pollution Accumulation and Abatement Policies in Two Supply Chains Under Vertical and Horizontal Competition and Strategy Types," Lecture Notes in Operations Research, in: Fouad El Ouardighi (ed.), Essays on Pollution Control in Economics and Management Science, chapter 0, pages 165-210, Springer.
    • Handle: RePEc:spr:lnopch:978-3-031-78227-5_6
    DOI: 10.1007/978-3-031-78227-5_6
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