Green Supply Chain Decision and Management under Manufacturer’s Fairness Concern and Risk Aversion

Abstract

This study focuses on the impact of a supply chain manufacturer’s fairness concern and risk aversion on the green supply chain and constructs a two-level green supply chain consisting of a manufacturer and a retailer. It compares three models: the manufacturer is a risk-neutral and fair-neutral, the manufacturer is a risk-averse and fair-neutral, and the manufacturer is a risk-averse and fair-concerned decision maker. In three cases, this paper examines how the manufacturer’s risk aversion and fairness concerns the impact product green level, retail price, and the wholesale price in the green supply chain. Consumers are sensitive to pricing strategies and product green level. The results are as follows: the manufacturer’s risk aversion leads to an increase in the retailer’s profit, and the manufacturer’s profit decreases with the increase in the risk aversion coefficient. Second, when demand meets certain conditions and the manufacturer has advantageous fairness concerns, the manufacturer benefits from fairness concerns, the retailer’s profit decreases with the manufacturer’s fairness concerns coefficient, and the manufacturer’s risk aversion will lead to a decline in the product green level. Third, when the manufacturer believes that the risk is relatively large, they reduce the technology investment of green products; thus, the fairness concerns of the manufacturer will affect the investment of green products and increase the green level of products. For enterprises: When supply chain members face various risks, they need to consider the specific needs of consumers and other members’ behavioral preferences. They can put forward a more scientific prediction of market demand and rational decision making. For customers: they should not only pay attention to changes in market prices, but should also pay attention to changes in the behavioral preferences of supply chain members, as customers are in line with their own interests based on the choice of high-quality green production.