Bundling or Unbundling? Pricing Strategy for Complementary Products in a Green Supply Chain

Haiyan Shan, Chen Zhang and Guo Wei
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Haiyan Shan: Institute of Climate Change and Public Policy, Nanjing University of Information Science & Technology, Nanjing 210044, Jiangsu, China
Chen Zhang: School of Management Science and Engineering, Nanjing University of Information Science & Technology, Nanjing 210044, Jiangsu, China
Guo Wei: Mathematics & Computer Science, University of North Carolina at Pembroke, Pembroke, NC 28372, USA

Sustainability, 2020, vol. 12, issue 4, 1-25

Abstract: Retailers usually sell complementary products jointly with a discounted price to attract more consumers. However, the difference of complementary degree between products leads to the diversity of pricing. In parallel, with the development of green supply chains, the extra cost of manufacturers to conduct ecological product design makes the pricing of complementary products further complicated. Thus, it is important to clarify the pricing strategy for complementary products in a green supply chain. Based on the Stackelberg games between two manufacturers and a retailer, this paper constructs three pricing models to simultaneously analyze the changes in the optimal profits of supply chain members and the optimal green manufacturing degree of complementary products. The results demonstrate that: (i) In most cases, two manufacturers prefer the pure bundling pricing strategy, but the strategy preference of the retailer is complex. (ii) The green manufacturing is mutually beneficial for complementary manufacturers and worth advocating. (iii) The increasing sensitivity of consumers to the green manufacturing level of one product will also be detrimental to the improvement of the optimal green manufacturing level of its complementary products.

Keywords: complementary product; green supply chain; bundling strategy; green manufacturing degree (search for similar items in EconPapers)
JEL-codes: O13 Q Q0 Q2 Q3 Q5 Q56 (search for similar items in EconPapers)
Date: 2020
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (5)

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