Abstract
In this paper, we consider a two-echelon sustainable supply chain with price-sensitive demand. The government taxes the carbon footprint of each item caused by producing, transporting, and consuming the products. Both the supplier and retailer can exert efforts to reduce the carbon footprint. In a non-cooperative setting, the government only taxes the supplier, so that the retailer has no incentive to exert any effort to reduce the carbon footprint and the supplier merely decides on the selling price to maximize its own profit. We develop a centralized supply chain and show that there is an optimal solution to maximize the channel profit. Since the centralized policy may not be always not practical, we propose a tax-sharing contract, where both parties profit from the carbon footprint reduction. This problem is modeled as the Stackelberg game and Nash game. The results show that the leader has more power than the follower, which results in more profit. The Stackelberg game provides boundaries for both parties’ profits in the Nash game. Although the tax-sharing contract does not result in full cooperation, its efficiency is still much higher than that of the non-cooperative case. The results are illustrated with some numerical experiments.
Highlights
With increased environmental consciousness over the past decade, environmental issues have become a major concern in industry
We develop a mathematical model to analyze the eco-efficiency of sustainable supply chains with different cooperation policies under the carbon footprint tax
We model cooperation structures in a sustainable supply chain where both parties undertake carbon footprint reduction initiatives, and study the effects of both pricing strategies and government intervention
Summary
With increased environmental consciousness over the past decade, environmental issues (e.g., global warming, desertification, and acid rain pollution) have become a major concern in industry. We develop a mathematical model to analyze the eco-efficiency of sustainable supply chains with different cooperation policies under the carbon footprint tax. With increasing consciousness of environmental protection, the enterprises in supply chains have been putting more effort to implement environmental practices For this reason, sustainable supply chain management has been studied extensively in the recent literature. Corbett and DeCroix [15] proposed a shared-saving contracts model for chemicals purchasing, which aims to reduce the consumption of indirect materials and maximize the supplier’s and retailer’s profits These previous studies did not develop mathematical models to analyze the market impacts and eco-efficiency under government intervention in a sustainable supply chain. We model cooperation structures in a sustainable supply chain where both parties undertake carbon footprint reduction initiatives, and study the effects of both pricing strategies and government intervention. The numerical experiments are presented to demonstrate the proposed model
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