Decision Making in Green Supply Chain with Manufacturers’ Misreporting Behavior

Abstract

To reduce the cost of energy conservation and emission reduction, some manufacturers will choose to misreport the green degree of their products, which may have some serious negative effects on the profit of the supply chain. To investigate the effects of the manufacturers’ misreporting strategy on the decisions and associated profit of the supply chain, we establish a two-period Stackelberg game model for a dual-channel manufacturer–retailer setting. Our results show that the manufacturers’ misreporting strategies lead to higher profits for them, which means that manufacturers tend to misreport the green degree of the products. However, the manufacturer’s misreporting strategy will put the retailer and the whole supply chain in a disadvantageous position and, hence, reduce the profit of the retailer and the whole supply chain. In addition, we also show that the manufacturer’s misreporting strategy only affects the greenness of the product and does not affect the pricing decisions of the manufacturer, the retailer and the whole supply chain. Finally, we design a revenue-sharing contract to achieve the coordination of the supply chain, which provides managerial insights for the decision makers of the supply chain.