Do retailer competition and partial vertical shareholding contribute to carbon abatement and the social environment?

Abstract

PurposeThis paper considers carbon abatement in a competitive supply chain that is composed of a manufacturer and two retailers under vertical shareholding. The authors emphasize the equilibrium decision problem of stakeholders under vertical shareholding and different power structures.Design/methodology/approachA game-theoretic approach was used to probe the influence of power structure and retailer competition on manufacturers' carbon abatement under vertical shareholding. The carbon abatement decisions, environmental imp4cacts (EIs) and social welfare (SW) of different scenarios under vertical shareholding are obtained.FindingsThe findings show that manufacturers are preferable to carbon abatement and capture optimal profits when shareholding is above a threshold under the retailer power equilibrium, but they may exert a worse negative impact on the environment. The dominant position of the held retailer is not always favorable to capturing the optimal SW and mitigating EIs. In addition, under the combined effect of competition level and shareholding, retailer power equilibrium scenarios are more favorable to improving SW and reducing EIs.Originality/valueThis paper inspects the combined influence of retailer competition and power structure on manufacturers' carbon abatement. Distinguishing from previous literature, the authors also consider the impact of vertical shareholding and consumer preferences. In addition, the authors analyze the SW and EIs in different scenarios.