Research on Pricing and Coordination Strategy of a Sustainable Green Supply Chain with a Capital‐Constrained Retailer

Abstract

With the gradual deepening of environmental problems and the increase in consumer awareness of environmental protection, many enterprises have already begun to pay attention to green supply chain management. However, the price of green products is higher than that of nongreen products, which is an enormous challenge for many small‐ or medium‐sized enterprises. To study the pricing and coordination of green supply chains under capital constraints, a model consisting of a manufacturer and a capital‐constrained retailer is established; the manufacturer invests in green products and provides a deferred payment contract. Setting the situation without capital constraints as a benchmark, this study explores the impact of the retailer’s capital constraints on the manufacturer’s product greenness design; an interesting result shows that deferred payment can help encourage the retailer to order more products and improve the profit of the manufacturer and the efficiency of the entire supply chain as well as the product’s greenness level simultaneously. However, the profit of the retailer will be hurt by the deferred payment contract. Therefore, to guarantee the profit of the entire channel and to make the two agents obtain a win‐win outcome, a new two‐way revenue‐sharing contract is designed to coordinate the green supply chain.