Green Supply Chain Decisions Under Different Power Structures: Wholesale Price vs. Revenue Sharing Contract

In the market, once consumers have a low-carbon preference, they will choose green low-carbon products. The market demand for green products is not only related to product price, but also consumers’ low-carbon preference. In this way, enterprise has to consider the cost of carbon emissions in the pr...

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Bibliographic Details
Main Authors: Xiaojing Liu, Wenyi Du, Yijie Sun
Format: Article
Language:English
Published: MDPI AG 2020-10-01
Series:International Journal of Environmental Research and Public Health
Subjects:
Online Access:https://www.mdpi.com/1660-4601/17/21/7737
Description
Summary:In the market, once consumers have a low-carbon preference, they will choose green low-carbon products. The market demand for green products is not only related to product price, but also consumers’ low-carbon preference. In this way, enterprise has to consider the cost of carbon emissions in the process of production and operation. In this paper, we consider a two-level supply chain system composed of a manufacturer and a retailer. The supply chain system can determine the price of products and the level of carbon emission reduction through different supply chain contracts: wholesale price contract and revenue sharing contract. However, the power control structure of a manufacturer and a retailer is different, which will further affect the decision-making strategy of the supply chain system. We set up four models (Wholesale Price—NM and NR, and Revenue-Sharing—SR and SM) of the supply chain with carbon emission reduction, and calculated and analyzed. The results show that firstly, regardless of whether the manufacturer's power control structure or the retailer power structure is dominant, the manufacturer wholesale price with a contract on revenue-sharing is always higher than on wholesale price, and it is inversely proportional to the revenue-sharing proportion. Secondly, under the two power control structures, the carbon emission level of the manufacturer with a contract on revenue-sharing is always lower than on wholesale price, and it gradually decreases with the increase of the revenue-sharing proportion of the manufacturers. Thirdly, when the retailer dominates the supply chain, the retailer selling price with a contract on revenue-sharing is always higher than on wholesale price. Under the manufacturer's power control structure, when the revenue-sharing ratio is small, the retailer selling price with a contract on revenue-sharing is higher than on wholesale price; when the revenue-sharing ratio is large, the retailer selling price with a contract on revenue-sharing is lower than on wholesale price. Finally, the validity of the model is verified by an example, and the sensitivity of the parameters is analyzed.
ISSN:1661-7827
1660-4601