The peril of distribution channel integration with environmental quality under supply chain competition

Suzhen Liang (), Adilson Borges, Junsong Bian and Guanghui Zhou ()
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Suzhen Liang: Rennes SB - Rennes School of Business
Adilson Borges: Rennes SB - Rennes School of Business
Junsong Bian: Rennes SB - Rennes School of Business
Guanghui Zhou: UCAS - University of Chinese Academy of Sciences [Beijing] - CAS - Chinese Academy of Sciences [Beijing]

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Abstract: This study analyzes vertical channel integration versus decentralization with products of different environmental quality under supply chain competition. We first examine the strategic impact of different channel structures on environmental quality, firms' profits, and welfare. Specifically, we analyze and compare different channel structures: no integration (decentralization), ordinary product channel integration, green product channel integration, and full channel integration. It is found that more channel integration will cause more intense competition in terms of environmental quality decisions between the manufacturers and thus lower profits. Therefore, the manufacturers always prefer decentralization over integration in equilibrium, which also constitutes a win-win distribution channel strategy compared to integration. Moreover, compared to vertical decentralization, channel integration does not necessarily increase the products' environmental quality in the market. Furthermore, we include two practical applications of the main model to study the interaction between channel strategies and production emissions with common emission regulation policies in practice: emission tax and emission reduction subsidy, as well as generalize the main model to examine multiple extensions including different consumer density, different efficiencies, sequential market competition, balanced objectives, crossselling, and partial market coverage.

Keywords: Green products; Channel competition and integration; Production emissions; Environmental quality; Supply chain management Environmental (search for similar items in EconPapers)
Date: 2026-08
New Economics Papers: this item is included in nep-com
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Published in European Journal of Operational Research, 2026, 332, pp.794 - 807. ⟨10.1016/j.ejor.2025.12.009⟩

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Persistent link: https://EconPapers.repec.org/RePEc:hal:journl:hal-05582790

DOI: 10.1016/j.ejor.2025.12.009

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