Strategies on Pricing, Greenness Degree, and Carbon Emission Reduction in Supply Chains under Single and Cross Distributions of Green and Nongreen Products

Abstract

Environmental sustainability has become a critical indicator in evaluations of the success and efficiency of supply chain management. In this study, we consider a two-echelon supply chain composed of two competing manufacturers, two retailers, and one third-party logistics firm. The first manufacturer produces a green product, while the second manufacturer produces a nongreen product. Each of the two retailers can sell only a green product, only a nongreen product, or both green and nongreen products. All products are initially stored by the third-party logistics firm and delivered to the retailers. This study investigates product pricing, the degree of greenness of the first manufacturer's product, and carbon emission reduction as carried out by the third-party logistics firm. Using a three-stage Stackelberg game framework, we present the equilibrium strategy on pricing, the degree of greenness, and carbon emission reduction for five different distribution channel structures. One of our major findings is that competition between the two manufacturers has a positive influence on the profitability of the supply chain. We also find that it is desirable for each manufacturer to choose a cross-distribution channel for its products considering the sustainability and profitability of the supply chain.