Green supply chain game model and analysis under revenue-sharing contract

Abstract

A revenue-sharing contract can play an important role in coordinating the distribution of benefits among the upstream and downstream members of a green supply chain and improving its overall performance. However, there are few quantitative studies on revenue-sharing contracts in green supply chains. To this end, we first establish a green supply chain game model with two kinds of revenue-sharing contracts, and then compare the results with the common centralized control game model and the decentralized decision game model's results. By comparing the models’ results, we can quantitatively analyze the impact of the contracts on the internal membership decision variables and the overall performance of the supply chain. Our study also takes consumer sensitivity towards green products into account to make a better sense of its impacts on the relative variables. Finally, we propose that a revenue-sharing contract can effectively improve the greening level of the products and the overall profitability of the supply chain. In particular, the retailer-led revenue-sharing contract leads to higher greening level compared with the decentralized control condition. In addition, under this case, both the manufacturer and the retailer get higher profits, which is of great significance to green supply chain's establishment and cooperation. In addition, the bargaining revenue sharing contract can make both product's greening level and supply chain's overall profit even higher than that under the retailer-led revenue sharing contract.