Economic Performance and Emission Reduction of Supply Chains in Different Power Structures: Perspective of Sustainable Investment

Xiutian Shi, Xiaoli Zhang, Ciwei Dong and Subin Wen
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Xiutian Shi: School of Economics and Management, Nanjing University of Science and Technology, Nanjing 210094, China
Xiaoli Zhang: School of Economics and Management, Nanjing University of Science and Technology, Nanjing 210094, China
Ciwei Dong: School of Business Administration/MBA School, Zhongnan University of Economics and Law, Wuhan 430073, China
Subin Wen: School of Economics and Management, Nanjing University of Science and Technology, Nanjing 210094, China

Energies, 2018, vol. 11, issue 4, 1-16

Abstract: Environmental issues have increasingly received attention in both industry and academia. Many firms have started to make sustainable investments, such as adopting the pollution-abatement technologies, to reduce carbon emissions. To investigate the impacts of the sustainable investment on firms’ profit and emission reduction, we consider supply chains with uncertain demand in different power structures. Specifically, we examine the sustainable investment problem in three supply chain power structures, i.e., manufacturer Stackelberg (MS) power structure, vertical Nash (VN) power structure and retailer Stackelberg (RS) power structure. We first derive the optimal decisions for both the retailer and manufacturer in each power structure. Then, by comparing the results in the three power structures, we find that the manufacturer gets benefits from making the sustainable investment, especially in unequal power structures. When the average market size is large (small) enough, both of the supply chain members obtain more profits in the MS (RS) power structure. From an environmental perspective, we find that the emission reduction is more significant in sequential games (i.e., MS and RS power structures) than that in a simultaneous game (i.e., VN power structure). In addition, we conduct some numerical studies and discuss more managerial insights in the paper.

Keywords: sustainable investment; emission reduction; power structure; stochastic demand; supply chain management (search for similar items in EconPapers)
JEL-codes: Q Q0 Q4 Q40 Q41 Q42 Q43 Q47 Q48 Q49 (search for similar items in EconPapers)
Date: 2018
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (9)

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