Green Supply Chain Game: Decision-Making and Coordination Mechanism Design

Abstract

The rapid development of industrialization has led to the increasing contradiction between human and nature, and green products are favored by more and more consumers. In this paper, a two-level green manufacturing supply chain between a manufacturer that produces green products and a retailer that invests in advertising is investigated. The Stackelberg game is used to study the supply chain decision-making and coordination problems when the demand depends on the greenness of the products and the investment in advertising, and to propose a coordination mechanism for cost-sharing and revenue-sharing. Finally, numerical simulation is used to simulate and analyze the research findings and important parameters. Our results indicate that: (1) When the cost-sharing coefficient and the benefit-sharing coefficient satisfy a certain range of conditions, the supply chain members considering a single coordination mechanism are superior to the supply chain without a coordination mechanism; (2) With the gradual increase in the cost-sharing coefficient of contract, the degree of greenness of the products produced by manufacturers and the level of intensity of the advertisements invested in by retailers show a tendency to increase first and then decrease; (3) In the study of the integrated coordination mechanism of cost-sharing and benefit sharing, the stronger the coordination ability of supply chain members, the wider the range of constraints to reach a win–win cooperation, and the higher the benefits created for supply chain members. All this yields novel insights into managing the manufacture of green products in the context of green supply chain members’ consideration of coordination mechanisms.