Pricing and Coordination Strategies in a Dual Channel Supply Chain with Green Production under Cap and Trade Regulation

Ata Allah Taleizadeh, Milad Shahriari and Shib Sankar Sana
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Ata Allah Taleizadeh: School of Industrial Engineering, College of Engineering, University of Tehran, Tehran 1417935840, Iran
Milad Shahriari: School of Industrial Engineering, College of Engineering, University of Tehran, Tehran 1417935840, Iran
Shib Sankar Sana: Department of Mathematics, Kishore Bharati Bhagini Nivedita College, R. K. Sarani, Kolkata 700060, India

Sustainability, 2021, vol. 13, issue 21, 1-18

Abstract: In this paper, we consider a two level dual channel green supply chain consisting of a retailer and a manufacturer with a separate sales channel for the manufacturer. The manufacturer uses green technology in its production and is required to produce in accordance with the cap and trade regulation. Using game theory, we compare cases where members decide to compete or cooperate with each other in terms of pricing and production. Our main contributions are studying the dual channel supply chain model where a manufacturer is regulated by the cap and trade system, using green production and also on their decision as to whether to compete or cooperate with a value-adding retailer. We also investigated the impact of green production on lowering the amount of carbon emissions produced. In the present study, supply chain members are advised to cooperate with each other in order to achieve the environmental benefits of the cap and trade system and, to avoid market failure, we further recommend that manufacturers should invest in green technologies for their production.

Keywords: pricing; cap and trade regulation; green technology; game theory (search for similar items in EconPapers)
JEL-codes: O13 Q Q0 Q2 Q3 Q5 Q56 (search for similar items in EconPapers)
Date: 2021
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (8)

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