Fairness-concerned greening and pricing strategies under competitions and different channel leaderships

Abstract

Optimal pricing decisions have been at the heart of the firms' marketing efforts. Recently managing different channels as well as increasing sustainability and greening initiatives has made decision-making more complex. The firms' collaboration with various partners and their pricing decisions and sustainability initiatives often experience obstacles due to their fairness concerns caused by the unfair profit distribution. In this study, we propose the stylized game-theoretic models to devise a fairness-concerned and environmental-friendly firm's pricing and greening decisions under downstream and upstream competitions using one-manufacturer-two-retailers and two-manufacturers-one-retailer supply chain frameworks, respectively. This provides a business-to-business (B2B) setting for profit distribution and pricing decisions with fairness concern and sustainability. We design the manufacturer-retailer collaboration mechanisms using the wholesale price and quantity discount contracts and determine the optimal greening and pricing decisions, and firms' utilities for all possible scenarios. We show that the quantity discount contract coordinates the manufacturer-led relationship. We propose a specially-designed fixed payment quantity discount contract to coordinate the retailer-led relationship for downstream and upstream competitions. As an extension, we design the fairness-concerned green supply chain by considering the supply chain members' non-identical distributional and peer-induced fairness concerns.