To Cooperate or Not? An Analysis of Complementary Product Pricing in Green Supply Chain

Jie Wei, Wen Wang, Sang-Bing Tsai and Xiaoli Yang
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Jie Wei: School of Economics and Management, Hebei University of Technology, Tianjin 300401, China
Wen Wang: Business School, Nankai University, Tianjin 300071, China
Sang-Bing Tsai: Zhongshan Institute, University of Electronic Science and Technology, Zhongshan 528400, China
Xiaoli Yang: Tianjin Social Sciences, Tianjin Academy of Social Science, Tianjin 300191, China

Sustainability, 2018, vol. 10, issue 5, 1-21

Abstract: This paper investigates the green supply chain pricing problem when two manufacturers sell complementary products to one retailer. Considering the manufacturers’ cooperation or noncooperation strategies, we first give the centralized pricing model as a benchmark. According to market power among the supply chain, we analyze two types of supply chains: supplier-led type where the green driving factor comes from the suppliers and retailer-led type where the core member retailer leads the green supply chain. We then give two decentralized pricing models through considering strategic cooperation between two manufacturers and different structures. Corresponding closed-form expressions for equilibrium pricing strategies are established. Finally, many valuable managerial results are acquired through comparing the profits and equilibrium decisions of these models. Our paper shows that consumers are indifferent as to who is the leader of the two echelons when the manufacturers adopt non-cooperative action; the two complementary products get the same optimal wholesale/retail prices, maximum retail margins, and maximum demands regardless of the manufacturers’ cooperation or noncooperation strategies.

Keywords: green supply chain; complementary products; supply chain leadership; cooperation pricing; sustainable pricing; sustainability (search for similar items in EconPapers)
JEL-codes: O13 Q Q0 Q2 Q3 Q5 Q56 (search for similar items in EconPapers)
Date: 2018
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (4)

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