Differential game analysis of carbon emissions reduction and promotion in a sustainable supply chain considering social preferences

Liangjie Xia, Yongwan Bai, Sanjoy Ghose and Juanjuan Qin ()
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Liangjie Xia: Tianjin University of Finance and Economics
Yongwan Bai: Tianjin University of Finance and Economics
Sanjoy Ghose: University of Wisconsin-Milwaukee
Juanjuan Qin: Tianjin University of Finance and Economics

Annals of Operations Research, 2022, vol. 310, issue 1, No 11, 257-292

Abstract: Abstract We incorporate consumer low-carbon awareness and social preferences, including relationship and status preferences, into a game of emissions reduction and promotion involving one manufacturer and one retailer using a long-term perspective. We investigate the channel members’ decision making and performance under three scenarios, including a decentralized scenario both with and without a cost-sharing contract as well as a centralized scenario. In addition, we examine the effects of some key parameters on the channel members’ decisions and performance. Our study finds that improving consumer low-carbon awareness is beneficial for carbon emissions reduction and both channel members’ utilities. A cost-sharing contract can incentivize the retailer to improve promotion efforts, and the manufacturer’s optimal emissions reduction effort is independent of the cost-sharing contract used. The cost-sharing proportion increases as the manufacturer gives more weight to the relationship and decreases as the retailer gives more weight to the relationship. A cost-sharing contract changes the effect of channel members’ social preferences and marginal profits on their decisions. Most importantly, the supply chain system can achieve Pareto improvement with a cost-sharing contract. If the manufacturer aims to optimize the supply chain’s total profit, then the supply chain system can achieve perfect coordination with a cost-sharing contract.

Keywords: Social preference; Carbon emissions reduction; Consumer low-carbon awareness; Promotion; Sustainable supply chain; Differential game (search for similar items in EconPapers)
Date: 2022
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Citations: View citations in EconPapers (4)

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DOI: 10.1007/s10479-020-03838-8

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