Differential game analysis of carbon emissions reduction and promotion in a sustainable supply chain considering social
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Differential game analysis of carbon emissions reduction and promotion in a sustainable supply chain considering social preferences Liangjie Xia1
· Yongwan Bai1 · Sanjoy Ghose2 · Juanjuan Qin1
Accepted: 20 October 2020 © Springer Science+Business Media, LLC, part of Springer Nature 2020
Abstract We incorporate consumer low-carbon awareness and social preferences, including relationship and status preferences, into a game of emissions reduction and promotion involving one manufacturer and one retailer using a long-term perspective. We investigate the channel members’ decision making and performance under three scenarios, including a decentralized scenario both with and without a cost-sharing contract as well as a centralized scenario. In addition, we examine the effects of some key parameters on the channel members’ decisions and performance. Our study finds that improving consumer low-carbon awareness is beneficial for carbon emissions reduction and both channel members’ utilities. A cost-sharing contract can incentivize the retailer to improve promotion efforts, and the manufacturer’s optimal emissions reduction effort is independent of the cost-sharing contract used. The cost-sharing proportion increases as the manufacturer gives more weight to the relationship and decreases as the retailer gives more weight to the relationship. A cost-sharing contract changes the effect of channel members’ social preferences and marginal profits on their decisions. Most importantly, the supply chain system can achieve Pareto improvement with a cost-sharing contract. If the manufacturer aims to optimize the supply chain’s total profit, then the supply chain system can achieve perfect coordination with a cost-sharing contract. Keywords Social preference · Carbon emissions reduction · Consumer low-carbon awareness · Promotion · Sustainable supply chain · Differential game
1 Introduction Sustainable supply chain management (SSCM) combines sustainability into supply chain management by keeping socioeconomic-environmental considerations that effectively manage goods, information and finance flows associated with cross functional modules such as
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Juanjuan Qin [email protected]
1
School of Business, Tianjin University of Finance and Economics, No. 25, Zhujiang Road, Tianjin 300222, China
2
School of Business Administration, University of Wisconsin-Milwaukee, Milwaukee, WI 53201, USA
123
Annals of Operations Research
materials management, production, sales, and order fulfillment (Manavalan and Jayakrishna 2019). In the midst of global warming and increasing consumer low-carbon awareness, SSCM has become an emerging and important area over the past two decades and has become easier to implement in the age of Industry 4.0 (Oztemel and Gursev 2020; Tang et al. 2019). In the recent past, an increasing number of consumers have paid attention to carbon emissions reduction and have become more likely to pay more for ecofriendly products (Liu et al. 2012). For example, a survey by the European Commission conducted in 2008 shows tha
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