Manufacturer encroachment on a green supply chain with environmental labeling

Abstract

AbstractThis paper investigates manufacturer encroachment on a green supply chain wherein alternative environmental labels are utilized to disclose the hidden product greenness attribute. We show that both self‐ and government labels facilitate and adjust the promotion effect of encroachment on product greenness, stimulating green demand and retail prices for profitability improvement and raising wholesale prices for investment sharing. The difference is that self‐labeling's low credibility and complete self‐interest features only induce inferior greenness increments and coordination effects. Government labeling outperforms self‐labeling in simultaneously optimizing the interests of the manufacturer, retailer, and society, presuming the benefits of greenness improvement reimburse investments.