Pricing Policies in Green Supply Chains with Vertical and Horizontal Competition

Shan Chen, Xu Wang, Lin Ni and Yingbo Wu
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Shan Chen: School of Mechanical Engineering, Chongqing University, Chongqing 400030, China
Xu Wang: School of Mechanical Engineering, Chongqing University, Chongqing 400030, China
Lin Ni: School of Mechanical Engineering, Chongqing University, Chongqing 400030, China
Yingbo Wu: School of Software Engineering, Chongqing University, Chongqing 400030, China

Sustainability, 2017, vol. 9, issue 12, 1-23

Abstract: The paper explores the pricing policies and green strategies in a duopoly green supply chain with vertical and horizontal competition, which includes a green manufacturer, a traditional manufacturer and a common retailer. The purpose of the paper is to address the following research problems: (1) How manufacturers’ market power influences the pricing policies and green strategies of supply chain members in a green supply chain? (2) What conditions do first-mover advantage and green competitive advantage be effective simultaneously? We establish the linear demand functions of the duopoly green supply chain and obtain the players’ optimal decisions under channel members’ different market power. Further, we conduct sensitivity analysis and numerical examples of players’ optimal decisions about consumer’s environmental awareness and greening cost effector. Based on the theoretical and numerical analysis, we find that green manufacturer would benefit from the increment of consumer’s environmental awareness but be depressed by the increase of greening cost, which is contrary to the traditional manufacturer. Additionally, correlations of retailer’ optimal decisions and profits between consumer’s environmental awareness and greening cost effector are related to the manufacturers’ market power structures. Furthermore, we find that the green competitive advantage is more effective than first-mover advantage while first-mover advantage does not always effective in the duopoly green supply chain. Specially, traditional manufacturer always prefers to be the follower competing with the green manufacturer, no matter with the variety of consumer’s environmental awareness and greening cost effector, while green manufacturer would like to be the leader only when the consumer’s environmental awareness is relatively high or the greening cost effector is relatively low.

Keywords: green supply chain; pricing policies; greenness; green competitive advantage (search for similar items in EconPapers)
JEL-codes: O13 Q Q0 Q2 Q3 Q5 Q56 (search for similar items in EconPapers)
Date: 2017
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (8)

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