Decision-making in a low-carbon supply chain considering consumers’ fairness concerns

Abstract

The purpose of our study is to discuss the impact of consumers’ market distribution and consumers’ fairness concerns on the decisions of supply chain participants. Based on utility theory, we innovatively incorporate consumers’ fairness concerns as a significant factor into the game model and focus on the impact of the utility gap between products on consumers’ purchasing willingness. In this paper, we establish a two-echelon supply chain consisting of one traditional manufacturer, one low-carbon manufacturer, and one retailer, and comparatively analyze the equilibrium results under the initial state and consumers’ fairness concerns. The results show that the presence of consumers’ fairness concerns results in the higher wholesale price, higher retail price, and larger profit of low-carbon products yet leads to a decline in traditional products’ pricing and profit, and the impacts on the low-carbon manufacturer are more significant than on the traditional manufacturer. A reduction appears in the retailer’s profit since consumers’ fairness concerns decrease the retailer’s ability to differential pricing. Additionally, the impacts of consumers’ fairness concerns on the game equilibrium are also affected by consumers’ market distribution and low-carbon manufacturers’ technical efficiency, and the impacts are more pronounced in an environment where low-carbon manufacturers’ R&D investments are more efficient. Furthermore, in a market dominated by low-carbon preferred consumers, low-carbon manufacturers are always more profitable than traditional manufacturers, while in a market dominated by traditionally preferred consumers, low-carbon manufacturers are only able to achieve higher profits than traditional manufacturers when R&D is quite efficient and consumers’ fairness concerns are relatively strong.