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Economic and Environmental Performance of Fashion Supply Chain: The Joint Effect of Power Structure and Sustainable Investment

Xiutian Shi (), Yuan Qian () and Ciwei Dong ()
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Xiutian Shi: School of Economics & Management, Nanjing University of Science & Technology, Nanjing 210094, China
Yuan Qian: School of Economics & Management, Nanjing University of Science & Technology, Nanjing 210094, China
Ciwei Dong: School of Business Administration/MBA School, Zhongnan University of Economics and Law, Wuhan 430073, China

Sustainability, 2017, vol. 9, issue 6, 1-22

Abstract: Fashion supply chain members now search for trade-offs between sustainable investment and the related incentives, such as savings on environmental taxes and gains in incremental demands. To evaluate the economic and environmental performance of sustainable investment from a power perspective, we develop an analytical model to study a two-echelon sustainable supply chain consisting of one retailer and one manufacturer with three different power structures. We derive the optimal solutions for various cases associated with different supply chain power structures and sustainable investors. Though it is beneficial for both the manufacturer and retailer to make sustainable investment, they often utilize high power to gain economic benefit with less sustainable investment. Interestingly, the follower with less supply chain power has more incentive to make a sustainable effort to achieve a higher profit. The optimal amount of sustainable investment in the apparel manufacturer investment case is greater than that in the retailer investment case in most scenarios.

Keywords: supply chain performance; sustainable investment; power structure; environmental tax (search for similar items in EconPapers)
JEL-codes: Q Q0 Q2 Q3 Q5 Q56 O13 (search for similar items in EconPapers)
Date: 2017
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