Green Supply Chain Management with Nash Bargaining Loss-Averse Reference Dependence

Wentao Yi, Zhongwei Feng, Chunqiao Tan and Yuzhong Yang
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Wentao Yi: School of Business Administration, Hunan University of Finance and Economics, Changsha 410205, China
Zhongwei Feng: School of Business Administration, Research Center for Energy Economics, Henan Polytechnic University, Jiaozuo 454000, China
Chunqiao Tan: School of Business, Nanjing Audit University, Nanjing 211815, China
Yuzhong Yang: School of Business Administration, Research Center for Energy Economics, Henan Polytechnic University, Jiaozuo 454000, China

Mathematics, 2021, vol. 9, issue 24, 1-26

Abstract: This paper investigates a two-echelon green supply chain (GSC) with a single loss-averse manufacturer and a single loss-averse retailer. Since the Nash bargaining solution exactly characterizes endogenous power and the contribution of the GSC members, it is introduced as the loss-averse reference point for the GSC members. Based on this, a decision model of the two-echelon GSC with loss aversion is formulated. The optimal strategies of price and product green degree are derived in four scenarios: (a) the centralized decision scenario with rational GSC members, namely the CD scenario; (b) the decentralized decision scenario with rational GSC members, namely the DD scenario; (c) the decentralized decision scenario with the GSC members loss-averse, where the manufacturer’s share is below its own loss-averse reference point, namely the DD(∆ m ≥ π m ) scenario; (d) the decentralized decision scenario with the GSC members loss-averse, where the retailer’s share is below its own loss-averse reference point, namely the DD(∆ r ≥ π r ) scenario. Then, a comparative analysis of the optimal strategies and profits in these four scenarios is conducted, and the impacts of loss aversion and green efficiency coefficient of products (GECP) on the GSC are also performed. The results show that (i) GECP has a critical influence on the retail price and the wholesale price; (ii) the GSC with loss aversion provide green products with the lowest green degree; (iii) the retail price, the wholesale price and product green degree are decreasing monotonically with the loss aversion level of the GSC member without incurring loss; (iv) furthermore, the effect of the loss aversion level of the GSC member with incurring loss on the optimal strategies is related to GECP and the gap between the GSC members’ loss aversion levels.

Keywords: green supply chain; loss aversion; nash bargaining solution; product green degree; green efficiency coefficient (search for similar items in EconPapers)
JEL-codes: C (search for similar items in EconPapers)
Date: 2021
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (1)

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