Green Technology Adoption in Textile Supply Chains with Environmental Taxes: Production, Pricing, and Competition

Abstract

Abstract Sustainability is crucially important for supply chain management. In this paper, we examine the impact of clean technology adoption on the textile supply chains with environmental taxes. We firstly consider a two-echelon textile supply chain consisting of one retailer and one manufacturer, where the manufacturer decides to adopt green technology for production. The adoption of green technology can help enhance product greenness and reduce unit production cost. We identify the optimal pricing and the product greenness decisions for the retailer and the manufacturer, respectively. We extend our model to examine the effects of retail competition. As the manufacturer produces for both retailers, there are spillover effects on clean technology cost reduction. We find that the optimal greenness levels are increasing in the environmental taxes and when the coefficient of competition is higher, the greenness levels are also higher. We identify the spillover effects on sustainable supply chain with clean technology adoption: the spillover effects are higher, the degree of green technology is increasing. More managerial insights are discussed.