Pricing, Green Degree and Coordination Decisions in a Green Supply Chain with Loss Aversion

Zhongwei Feng and Chunqiao Tan
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Zhongwei Feng: School of Business, Central South University, Changsha 410083, Hunan, China
Chunqiao Tan: School of Business, Central South University, Changsha 410083, Hunan, China

Mathematics, 2019, vol. 7, issue 3, 1-25

Abstract: The consumer environmental awareness promotes green manufacturing and the behavioral preferences of members become prevailing in supply chain management. To promote further development of green supply chains, a two-echelon green supply chain with a manufacturer and a retailer is considered, where the manufacturer is loss-averse and the retailer is risk-neutral. We use a Stackelberg game to investigate the impacts of loss aversion and green efficiency coefficient on retail price, wholesale price, green degree, profits of members, and profit of the green supply chain under the assumption that manufacturer’s reference point of loss aversion is equal to the subgame perfect equilibrium partition. It is shown that, in the centralized decision-making setting (CDS), green degree and profit of the green supply chain are higher than those in the decentralized decision-making setting (DDS), while in the decentralized decision-making setting with a loss-averse manufacturer (DDS-LAM) loss aversion of manufacturer further decreases green degree and profit of green supply chain. It is also found that profits of the manufacturer and the retailer decrease with levels of loss aversion of manufacturer. Furthermore, it is also shown that wholesale price and retail price in the three decision-making settings depend on the green efficiency coefficient. Wholesale price and retail price in DDS-LAM are always the lowest (highest) if the green efficiency coefficient is sufficiently high (low). Finally, executing a greening cost-sharing contract can improve chain members’ profits if the retailer shares an appropriate proportion with the loss-averse manufacturer.

Keywords: green supply chain management; green efficiency coefficient; loss aversion; reference point; greening cost-sharing contract (search for similar items in EconPapers)
JEL-codes: C (search for similar items in EconPapers)
Date: 2019
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (2)

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