Profit Seeking versus Survival Seeking: Green Investment of Capital-Constrained Suppliers with Incentive Contracts

Bing Xia and Junling Zhang

Mathematical Problems in Engineering, 2021, vol. 2021, 1-15

Abstract:

This study explores a supply chain with a capital-constrained startup supplier who invests in product greenness and a manufacturer who sells green products to consumers under demand uncertainty. Green investment of the supplier is supported by the manufacturer with two incentive contracts: (i) investment- and (ii) revenue-sharing contracts. Profit- and survival-seeking objectives are considered for the startup supplier. Results show that the profit-seeking supplier increases its product greenness if demand uncertainty rises, whereas the survival-seeking supplier increases its product greenness if its capital constraints increase. Compared with the commonly used wholesale price contract, investment- and revenue-sharing contracts can help facilitate the “win-win” supply chain cooperation for improving product greenness. If the profit-seeking supplier cooperates with the manufacturer, the investment-sharing contract is preferred as the demand uncertainty increases. If a survival-seeking supplier cooperates with the manufacturer, the revenue-sharing contract is preferred as the capital constraint increases. Overall, the revenue-sharing contract is preferred given the high attractiveness of the green investment. By extending the discussion into two periods, the revenue-sharing contract will be preferred in the survival-seeking case because the cooperation can continue in a large parameter space.

Date: 2021
References: Add references at CitEc
Citations:

Downloads: (external link)
http://downloads.hindawi.com/journals/MPE/2021/6677187.pdf (application/pdf)
http://downloads.hindawi.com/journals/MPE/2021/6677187.xml (text/xml)

Related works:
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:hin:jnlmpe:6677187

DOI: 10.1155/2021/6677187

Access Statistics for this article

More articles in Mathematical Problems in Engineering from Hindawi
Bibliographic data for series maintained by Mohamed Abdelhakeem ().