Optimization of a Two-Echelon Supply Chain Considering Consumer Low-Carbon Preference

Ying Shi and Xin Li ()
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Ying Shi: International Business School, Innovation Center for China-U.S. Youth Exchange, Guangdong University of Finance & Economics, Guangzhou 510320, China
Xin Li: School of Business, Macau University of Science and Technology, Macau SAR, China

Mathematics, 2023, vol. 11, issue 15, 1-22

Abstract: This paper considers a fresh food supply chain with a supplier who takes responsibility for the cold chain and a retailer who needs to reprocess the fresh food. Carbon emissions will be produced in the processes of production, transportation, processing, etc. We consider the four-stage game, obtain the function expressions of optimal market prices with respect to carbon emission reduction level (CERL), analyze the best responses of the supplier and the retailer regarding their CERLs, and obtain the 25 optimal CERLs under competitive equilibrium. In 24 of the 25 equilibrium cases, the supplier or the retailer either do nothing to reduce carbon emissions, or make the most effort to reduce carbon emissions. Excluding these special cases, we focused on a non-trivial case where the increasing consumer preferences for low-carbon products will encourage the supplier and the retailer to reduce carbon emissions. Interestingly, we find that when the consumer preference for low-carbon products is low, the retailer’s and supplier’s equilibrium carbon reduction levels are low, so that the potential market size is small such that the competition for two kinds of customers is fierce. Then, an increase in the sale cost will reduce the retail price. However, when the consumer preference for low-carbon products is high, the potential market size is large such that the competition is not fierce. Then, an increase in the sale cost will advance the retail price.

Keywords: fresh food; supply chain; carbon emission; low-carbon preference (search for similar items in EconPapers)
JEL-codes: C (search for similar items in EconPapers)
Date: 2023
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (1)

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