Pricing strategies and profit coordination under a double echelon green supply chain

Abstract

The green characteristics of the product will not only attract more environmental consumers, but also affect the cost of the enterprise. In order to investigate equilibrium decisions and profit coordination methods of green supply chain, a set of Stackelberg game models considering different pricing strategies, profit coordination modes and information pattens are constructed and analyzed, in which two competitive retailers purchase a type of green product from a manufacturer who commits to green investment. We discover that the pricing strategy has an evident impact on the profit level of supply chain members but has no effect on the green degree of the product, both the manufacturer and the retailer with higher market potential tend to choose consistent wholesale price, while the retailer with lower market potential prefers inconsistent wholesale price. In addition, the green degree which reflects the product’s environmental protection degree of the manufacturer is positively related to environmental consciousness of customers and negatively correlated with green degree cost coefficient. Furthermore, an improved coordination model based on two-part tariff can not only reach the profit level under the centralized scenario, but also make the retailers benefit from the profit increasing. Finally, an asymmetric information model with uncertain market demand and asymmetric information between retailers is studied. The results show that the equilibrium profits of supply chain members are obviously affected by uncertain demand and asymmetric information. The retailer with information advantage gains more profit than the retailer without information advantage when the demand is uncertain. Those conclusions are conducive to improving the cooperation level of members and promoting the sustainable development of green supply chain.