A game theoretic approach for green and non-green product pricing in chain-to-chain competitive sustainable and regular dual-channel supply chains

Abstract

Nowadays, sustainable supply chain has become an exciting concept during the academic societies. This paper considers environmental and economic aspect of sustainability. Due to environmental concerns, the entry of green products into today's markets is on the rise. How to compete for the production of green products with non-green products is essential in these markets. Therefore, this research focuses on the pricing and determination of the degree of greenness of a product in competition with a non-green product. This study, for the first time, investigates the pricing of two substitute products, a green product produced by one manufacturer and a non-green product produced by a second manufacturer, under two dual-channel supply chains including retail and internet channels. The decision variables for one manufacturer are the price and degrees of eco-friendliness of the green product; for the other, the decision variable is the price of the non-green product. This problem is solved under two different scenarios: centralized and decentralized. In the decentralized scenario, a Stackelberg competition is considered between the retailer level and the manufacturer level of the total supply chains in which the manufacturers are assumed to be the leader, and the retailers are the followers. In the centralized scenario, players in each of their related supply chain are integrated. The problem is solved and compared under two scenarios. Finally, both parametric and numerical analyses are presented and some managerial insights are provided and some of which are as follows: The centralized scenario cause to achieve high the green degree comparing with the decentralized scenario.