Green design strategies for sustainable supply chain considering channel leadership

Abstract

We have observed from practice that to create new economic and environmental values, both the upstream and downstream firms in sustainable supply chain are motivated to invest in green design. Channel leadership as an important factor affecting the channel profit distribution will reshape the investment motivation of enterprises. In this paper, we construct six kinds of pricing and green design decision models to explore the optimal green design strategies for sustainable supply chain consisting of one manufacturer and one retailer under different channel leadership, and investigate the interaction between channel leadership and green design strategy, and their impacts on sustainable supply chain performance, environment and consumer surplus. We find that regardless of the channel leadership, the wholesale and retail prices of products under different green design strategies are always affected by the cost effect of green design. In terms of boosting the green design level and market demand, increasing the consumer surplus and enterprises profits, only when the manufacturer is the channel leader and the green design cost effect is small, the retailer can implement green design better. Moreover, when the manufacturer implements green design, the better channel structure between the retailer-led and Nash equilibrium game depends on the green design cost effect, but both are better than the manufacturer-led. However, when the retailer implements green design, the channel structure of Nash equilibrium game is always better. We finally illustrate that under different channel leadership, which green design strategy is more conducive to reducing the total environment impact of products depends on the joint effect of green design cost effect and green design environment effect.