Low-carbon supply chain strategy and contract coordination considering manufacturers′ fairness concerns

Chunhai Yu (), Yingxiang Zhang (), Ling Liu () and Thomas W. Archibald ()
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Chunhai Yu: Northeastern University
Yingxiang Zhang: Shanghai University of Finance and Economics
Ling Liu: University of Edinburgh Business School
Thomas W. Archibald: University of Edinburgh Business School

Operational Research, 2024, vol. 24, issue 4, No 12, 51 pages

Abstract: Abstract The government′s carbon policies and consumers′ increasing environmental awareness have accelerated the transformation of the traditional supply chain into the low-carbon supply chain (LCSC). This study examines the impact of fairness concerns on low-carbon supply chain decisions and coordination. This study considers the manufacturer′s fairness concerns about its upstream suppliers, who are also carbon emitters, and uses game theory to investigate the low-carbon efforts (carbon emission reduction levels and low-carbon products promotion) and coordination mechanisms of a three-echelon LCSC under cap-and-trade regulation. Specifically, we examine the impact of the manufacturer′s fairness concerns, consumers′ low-carbon preferences and carbon trading prices on the low-carbon efforts, production quantity, and profits in the three-echelon LCSC. We find that the manufacturer′s fairness concerns about upstream carbon emitters will decrease all members′ enthusiasm for low-carbon efforts and lower the profits of the other members. Furthermore, we explore five decision models with different levels of joint-decision making to explore which coalitions might be most effective in the LCSC performs in terms of low-carbon efforts and profits. We conclude that the cooperation of carbon emitters is vital for low-carbon efforts and that the LCSC may be Pareto-improving under the two-way emission reduction cost sharing contract.

Keywords: Cap-and-trade regulation; Three-echelon supply chain; Low-carbon efforts; Fairness concerns; Cost sharing contract (search for similar items in EconPapers)
Date: 2024
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DOI: 10.1007/s12351-024-00869-y

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