Fashion Supply Chain Network Competition with Ecolabeling

Abstract

In this chapter we develop a competitive supply chain network model for fashion that incorporates ecolabeling. We capture the individual profit-maximizing behavior of the fashion firms which incur ecolabeling costs with information associated with the carbon footprints of their supply chains revealed to the consumers. Consumers, in turn, reflect their preferences for the branded products of the fashion firms through their demand price functions, which include the carbon emission information. We construct the underlying network structure of the fashion supply chains and provide alternative variational inequality formulations of the governing Nash equilibrium conditions. The model, as a special case, also captures carbon taxes. We discuss qualitative properties of the equilibrium product flow pattern and also propose an algorithm, which has elegant features for computational purposes. We provide both an illustrative example as well as a variant and then discuss a case study with several larger numerical examples.