Green or non-green: A game to introduce decision making under fairness concerns

Abstract

As such problems as scarcity of resources and environmental pollution have become increasingly prominent, the concept of emerging green products has been gradually entering the consciousness of manufacturers and retailers. However, will the supply chain members challenged by the high cost of green products be willing to make the transition to green production? To answer this question, this paper studies the production and sales decisions made by the manufacturers and retailers when taking the production of both common products and green products into consideration. In terms of product selection, the model of fairness and neutrality concerns is constructed and carefully studied. It is found in this study that with all the manufacturers under capacity constraints, when the manufacturers produce common products, their fairness concerns will increase their own utility but damage that of their downstream partners; when it comes to green products, the fairness concerns of the retailers will not decrease the utility of the manufacturers, which is the same case as the fairness-neutral retailers, but the manufacturers will be provoked to maximize their utility by their fairness concerns; the optimal level of green efforts by manufacturers and retailers should be obtained by measuring the cost coefficients of both parties. These conclusions will not only help improve the green level of the supply chain but also well exhibit the friendly development of surrounding conditions.