Optimal decisions and Pareto improvement for green supply chain considering reciprocity and cost-sharing contract.

Abstract

With the rapid development of green consumption demand, more and more consumers choose to purchase green products. Incorporating consumers' environmental awareness into a green supply chain, this paper studies the decisions and coordination of the green supply chain under the retailer's reciprocal preference. The decentralized models with and without reciprocity are constructed and analyzed with consideration of product green degree and pricing. Then, the cost-sharing joint commission contract is proposed to realize Pareto improvement. Finally, propositions and conclusions are verified by numerical simulation. The results indicate that improving consumers' environmental awareness is favorable to the profit of the whole supply chain and environment. Besides, within the reasonable range of retailer's reciprocal preference, higher value of the retailer's reciprocal preference is conductive to the better realization of environmental protection and the improvement of the economic welfare of the whole society. The cost-sharing contract exerts a positive effect in improving the environmental and economic performance in the green supply chain (GSC). The paper provides a theoretical foundation for the design of cooperative contracts in the GSC, especially the GSC with retailer's reciprocal preference.