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Coordinating Risk Aversion and Pricing Strategies in Green Supply Chains: A Study of Manufacturer Competition

Author

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  • Zhen Chen

    (School of Business Administration, Liaoning Technical University, Huludao 125105, China
    Faculty of Engineering and IT, University of Technology Sydney, Sydney 2007, Australia)

  • Kaveh Khalilpour

    (Faculty of Engineering and IT, University of Technology Sydney, Sydney 2007, Australia
    Australia-China Relations Institute, University of Technology Sydney, Sydney 2007, Australia)

  • Qingzhen Yao

    (School of Business, Liaocheng University, Liaocheng 252000, China)

Abstract

The green supply chain is a crucial approach to addressing environmental issues and supporting sustainable development. This study examines the coordination challenges in green supply chains, accounting for risk aversion and manufacturer competition. It explores how risk-averse behavior influences operational decisions, offering strategies to enhance cooperation among supply chain members. This study develops three key models: a rational behavior model, a risk aversion model, and a cost-sharing contract model, deriving optimal equilibrium decisions for each. It analyses the impact of risk aversion on pricing, product greenness, and profitability in a competitive manufacturing environment and compares outcomes across the models. Numerical simulations validate the findings, revealing that higher levels of manufacturer risk aversion lead to reduced wholesale prices, retail prices, and product greenness, which hinder the achievement of sustainability goals. Profitability and product greenness are lower under the risk aversion model compared to the rational behavior model. Under conditions of weak market competition, cost-sharing contracts effectively enhance profitability for both manufacturers and retailers while fostering collaboration to improve sustainable green practices within the supply chain. These findings provide actionable insights for green supply chain enterprises and contribute to the theoretical foundation of green supply chain research, particularly in contexts involving manufacturer competition and risk aversion.

Suggested Citation

  • Zhen Chen & Kaveh Khalilpour & Qingzhen Yao, 2024. "Coordinating Risk Aversion and Pricing Strategies in Green Supply Chains: A Study of Manufacturer Competition," Sustainability, MDPI, vol. 16(24), pages 1-20, December.
    • Handle: RePEc:gam:jsusta:v:16:y:2024:i:24:p:11284-:d:1550588
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    References listed on IDEAS

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