Information Acquisition for Product Design in a Green Supply Chain

Abstract

This paper studies the interaction between the product development mode and the acquisition of consumers’ environmental awareness (CEA) information in a two-echelon green supply chain. Our study shows that when the downstream manufacturer achieves the CEA information superiority, the in-house mode improves the total environmental quality and is better for supply chain members than the outsourcing mode. In contrast, when the upstream supplier achieves the information advantage, the green product development modes affect neither the decisions nor the performance of supply chain members because the supplier discloses its CEA information through pricing and/or green level decisions. We further find that under the outsourcing mode, the supplier has more incentive to achieve CEA information superiority, which always improves the total environmental quality and may benefit the manufacturer; however, under the in-house mode, the supplier’s superior information benefits the manufacturer and itself as well as total environmental quality only under certain conditions. Finally, we show that the downstream CEA information disclosure under the outsourcing mode helps supply chain members achieve a Pareto improvement and increases the total environmental quality; this finding is contrary to the extant literature that focuses on demand intercept information disclosure.