Green Product Pricing and Purchasing Strategies in a Two-Period Supply Chain considering Altruistic Preferences

Abstract

With improvements in consumers’ environmental awareness and the promulgation of environmental regulations, an increasing number of companies are beginning to pay attention to green product design, pricing, and purchasing strategies. However, due to demand fluctuations and cost changes brought about by green product design and manufacturing, understanding corporate behavior preferences and constructing non-single-period pricing and procurement strategies can profoundly affect long-term cooperation among green supply chain members. This paper constructs six scenarios in which decision-makers have altruistic preferences simultaneously or separately and whether the retailer adopts strategic inventory. In addition, the impact of altruistic preferences and strategic inventory on the decision-making and profits of the two-period supply chain for marginal cost-intensive green products (MIGPs) are analyzed. The results show that altruistic preferences and purchasing strategies do not affect MIGPs’ greening levels. Besides, the retailer’s strategic inventory is still an effective bargaining tool but is not necessarily beneficial to profits. Noteworthy, when deciders exhibit altruism simultaneously or alone, the effects on certain decisions and strategic inventory range are significantly different. Finally, the retailer’s altruistic preference may not affect the green supply chain’s profits, but the manufacturer’s altruism improves total profits.