Impacts of heterogeneous environment awareness and power structure on green supply chain

Xue, Musen; Zhang, Jianxiong

RAIRO - Operations Research - Recherche Opérationnelle, Tome 52 (2018) no. 1, pp. 143-157.

In this study, we employ a game-theory-based framework to model power structure and consumers’ heterogeneity toward the environmental level of products in a green supply chain and examine how consumer’s heterogeneity and power structure affect green product development and the performance of green supply chain. The key findings indicate that it can be optimal for the retailer to charge a higher selling price in the integrated supply chain, which is contrast to previous finding in the literature. Importantly, we identify a condition where there is no power conflict in the green supply chain, which indicates that the manufacturer is willing to drop its power while the retailer is willing to possess power resulting in a “power equilibrium”. Also, heterogeneous environment awareness of consumer considerably affect the value of channel integration. Overlooking heterogeneous responses would result in either undercutting or overestimating the benefit from channel integration.

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