US E-commerce will lose $500 million

Abstract

Analyzing carbon emissions is critical for successfully managing sustainable production and consumption. In a dual channel supply chain that includes traditional retailers and online e-tailers, consumer free riding often occurs when consumers enjoy the services provided by a traditional retailer but make purchases at a lower price from an e-tailer. The specific aim of this paper, therefore, is to evaluate the impact of consumer free riding on carbon emissions in a product's life cycle across a dual channel closed loop supply chain and to assess the effect of governmental e-commerce tax on carbon emissions. The study comprises a systematic comparison and numerical analysis of cases in which consumers do or do not free ride. Our results show that although manufacturers may gain economic benefits from consumer free riding behavior, total carbon emissions across the supply chain increase too, and a governmental tax on e-commerce can help reduce consumer free riding and total carbon emissions. Our research also suggests that, a government may have to subsidize the e-tailer in the consideration of maximizing the social welfare.