A Game Theoretical Approach to Competition Between Members of a Green Supply Chain with Hybrid Products

Abstract

With progressing technologies green products are in competition with non-green products. In real world, there exist many firms that produce green and non-green products. In this study, a green supply chain(GSC) with a supplier and a manufacturer is considered. The supply chain(SC) produces green and non-green products. Market demands for both non-green and green products are available. These products might be replaced with each other. If the demand isn't satisfied by green products, hybrid production mode involving green and non-green products is chosen by the manufacturer. The government is considered as the leader of the game and fixes special tariffs(tax and subsid) for all products to control the market demand. A game theoretical model is formulated in four scenarios by considering collaboration of members in the SC. The ideal prices of raw materials, selling prices, and demand for green and non-green products are calculated. A numerical example that consists of sensitivity analysis of some main parameters is presented to compare the outcomes of various scenarios. The results indicate that collaboration between supplier and manufacturer has significant impact on a profit of GSC. Besides, Various consumer’s priorities are covered in hybrid production mode. The results show that by choosing hybrid production mode, the profit of SC decreases and hybrid production mode hasn't positive role on profit of SC and membership. Sensitive analysis shows that increasing tariffs by government causes an increase in summation profit function of GSC and profit function of member of GSC. Moreover, the demand for non-green products increases.