Abstract
This paper investigates a two-echelon green supply chain (GSC) with a single loss-averse manufacturer and a single loss-averse retailer. Since the Nash bargaining solution exactly characterizes endogenous power and the contribution of the GSC members, it is introduced as the loss-averse reference point for the GSC members. Based on this, a decision model of the two-echelon GSC with loss aversion is formulated. The optimal strategies of price and product green degree are derived in four scenarios: (a) the centralized decision scenario with rational GSC members, namely the CD scenario; (b) the decentralized decision scenario with rational GSC members, namely the DD scenario; (c) the decentralized decision scenario with the GSC members loss-averse, where the manufacturer’s share is below its own loss-averse reference point, namely the DD(∆m ≥ πm) scenario; (d) the decentralized decision scenario with the GSC members loss-averse, where the retailer’s share is below its own loss-averse reference point, namely the DD(∆r ≥ πr) scenario. Then, a comparative analysis of the optimal strategies and profits in these four scenarios is conducted, and the impacts of loss aversion and green efficiency coefficient of products (GECP) on the GSC are also performed. The results show that (i) GECP has a critical influence on the retail price and the wholesale price; (ii) the GSC with loss aversion provide green products with the lowest green degree; (iii) the retail price, the wholesale price and product green degree are decreasing monotonically with the loss aversion level of the GSC member without incurring loss; (iv) furthermore, the effect of the loss aversion level of the GSC member with incurring loss on the optimal strategies is related to GECP and the gap between the GSC members’ loss aversion levels.
Highlights
Global warming has critical effects on economies around the world, and the effects are continuously increasing
This paper is organized as follows: in Section 2, the literature on the topic of green supply chain management (GSCM) and supply chain management (SCM) with loss aversion is reviewed such that the contribution of this work is explained; in Section 3, decision models of the two-echelon green supply chain (GSC) with rational preference and loss aversion are constructed, respectively; in Section 4, a comparative study is performed to explore the impact of the green efficiency coefficient of products (GECP) and loss aversion on GSC decisions; Section 5 is a numerical analysis; in Section 6, managerial insights are considered; in Section 7, conclusions are presented
In contrast to above works, we examine the optimal strategies of the two-echelon GSC with a single loss-averse manufacturer and a single loss-averse retailer, where the Nash bargaining solution is regarded as the loss-aversion reference points to characterize the endogenous power and contribution of the GSC members
Summary
Global warming has critical effects on economies around the world, and the effects are continuously increasing. The impacts of loss-aversion preferences on decisions have increasingly received attention from an increasing number of scholars in the SCM [33,34,35,36]. This paper is organized as follows: in Section 2, the literature on the topic of GSCM and SCM with loss aversion is reviewed such that the contribution of this work is explained; in Section 3, decision models of the two-echelon GSC with rational preference and loss aversion are constructed, respectively; in Section 4, a comparative study is performed to explore the impact of the green efficiency coefficient of products (GECP) and loss aversion on GSC decisions; Section 5 is a numerical analysis; in Section 6, managerial insights are considered; in Section 7, conclusions are presented
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