Firms' preferences for retailing formats considering one manufacturer's emission reduction investment

Abstract

Nowadays, many countries and governments implement the cap-and-trade regulation to curb carbon emissions. This study aims to explore how the regulation affects an e-tailer's choice of retailing formats between marketplace and reseller as well as its partner's response by considering a supply chain composed of an e-tailer and a manufacturer. We also take the manufacturer's investment strategy into account and then develop four models to examine the two members' preferences for retailing formats. First, our results demonstrate that if a product's emissions in the retail process are medium (low) or the platform fee rate is relatively low (high), the e-tailer and the manufacturer both prefer marketplace (reseller) mode. Second, the e-tailer prefers to offer reseller mode for one manufacturer with a strong ability of emission reduction and offer marketplace mode otherwise; but the manufacturer's preference is opposed to the e-tailer's. Third, the manufacturer always benefits from her investment, regardless of in marketplace or reseller modes; the e-tailer's attitude towards the manufacturer's investment varies with retailing formats. Specifically, the e-tailer under reseller mode always prefers the manufacturer to invest; but under marketplace mode, he prefers the manufacturer to invest only when the latter's ability of emission reduction is weak.