Joint impact of CSR policy and market structure on environmental sustainability in supply chains

Abstract

The integration of Corporate Social Responsibility (CSR) and Smart Manufacturing (SM) has emerged as a promising strategy for addressing carbon emissions. Governments can play a crucial role in promoting sustainable practices and environmental sustainability by implementing targeted policies and regulations. In this study, we examine the sustainability performance of competing smart supply chains that offer substitutable products under different CSR regulatory policies. Specifically, we investigate five CSR policies: Deregulation, Direct Tariff on Market, Sustainability Penalty and Credits, Direct Limitation on Sustainability, and Government Cooperative Sustainability Efforts. Using a game theoretical framework, we model and analyze the effectiveness of each CSR policy within monopoly and oligopoly market structures. Our results uncover the importance of considering the synergistic effects of market structure and CSR when designing sustainability strategies for policymakers and supply chain managers. For instance, the Direct Tariff on Market policy in the monopoly market is shown to be the preferred regulatory approach as it effectively enhances both supply chain profitability and environmental sustainability. Furthermore, the Direct Tariff on Market policy in the oligopoly market, along with the Direct Limitation on Sustainability policy in the monopoly market, results in a greater market share of sustainable products. Understanding these dynamics enables policymakers to make informed decisions that maximize the environmental benefits of CSR practices, considering varying market structures.