IDEAS home Printed from https://ideas.repec.org/a/spr/opsear/v59y2022i3d10.1007_s12597-021-00569-7.html
   My bibliography  Save this article

Optimal sustainability investment and pricing decisions in a two-echelon supply chain with emissions-sensitive demand under cap-and-trade policy

Author

Listed:
  • Bibhas C. Giri

    (Jadavpur University)

  • Ishani Ray

    (Jadavpur University)

Abstract

With the alarming increase in global warming, business activities are being modified by green/sustainable initiatives through immense research. This paper considers a sustainable supply chain which consists of a supplier and a manufacturer. The market demand is emissions-sensitive besides dependent on the selling price and sustainability levels of the supplier and the manufacturer. To maintain the sustainability level of the whole supply chain, both the supply chain entities make investments. The decision behaviors of the centralized and the decentralized channels are compared and a two-part tariff contract is implemented to coordinate the supply chain under the cap-and-trade policy. It is found from the numerical study that the total profit in the centralized system is almost 10% higher than that of the decentralized system. Further, the two-part tariff contract leads to a perfect channel coordination. Sensitivity analysis is performed to examine the effects of key model-parameters on the optimal decisions.

Suggested Citation

  • Bibhas C. Giri & Ishani Ray, 2022. "Optimal sustainability investment and pricing decisions in a two-echelon supply chain with emissions-sensitive demand under cap-and-trade policy," OPSEARCH, Springer;Operational Research Society of India, vol. 59(3), pages 786-808, September.
    • Handle: RePEc:spr:opsear:v:59:y:2022:i:3:d:10.1007_s12597-021-00569-7
    DOI: 10.1007/s12597-021-00569-7
    as

    Download full text from publisher

    File URL: http://link.springer.com/10.1007/s12597-021-00569-7
    File Function: Abstract
    Download Restriction: Access to the full text of the articles in this series is restricted.
    File URL: https://libkey.io/10.1007/s12597-021-00569-7?utm_source=ideas
    LibKey link: if access is restricted and if your library uses this service, LibKey will redirect you to where you can use your library subscription to access this item
    ---><---

    As the access to this document is restricted, you may want to search for a different version of it.

    References listed on IDEAS

    as
    1. Hua, Guowei & Cheng, T.C.E. & Wang, Shouyang, 2011. "Managing carbon footprints in inventory management," International Journal of Production Economics, Elsevier, vol. 132(2), pages 178-185, August.
    2. S Swami & J Shah, 2013. "Channel coordination in green supply chain management," Journal of the Operational Research Society, Palgrave Macmillan;The OR Society, vol. 64(3), pages 336-351, March.
    3. Ghosh, Debabrata & Shah, Janat, 2012. "A comparative analysis of greening policies across supply chain structures," International Journal of Production Economics, Elsevier, vol. 135(2), pages 568-583.
    4. White, Leroy & Lee, Gregory John, 2009. "Operational research and sustainable development: Tackling the social dimension," European Journal of Operational Research, Elsevier, vol. 193(3), pages 683-692, March.
    5. Aidt, T.S.Toke Skovsgaard & Dutta, Jayasri, 2004. "Transitional politics: emerging incentive-based instruments in environmental regulation," Journal of Environmental Economics and Management, Elsevier, vol. 47(3), pages 458-479, May.
    6. Du, Shaofu & Zhu, Lili & Liang, Liang & Ma, Fang, 2013. "Emission-dependent supply chain and environment-policy-making in the ‘cap-and-trade’ system," Energy Policy, Elsevier, vol. 57(C), pages 61-67.
    7. Xu, Xiaoping & He, Ping & Xu, Hao & Zhang, Quanpeng, 2017. "Supply chain coordination with green technology under cap-and-trade regulation," International Journal of Production Economics, Elsevier, vol. 183(PB), pages 433-442.
    8. Plambeck, Erica L., 2012. "Reducing greenhouse gas emissions through operations and supply chain management," Energy Economics, Elsevier, vol. 34(S1), pages 64-74.
    9. S. Du & F. Ma & Z. Fu & L. Zhu & J. Zhang, 2015. "Game-theoretic analysis for an emission-dependent supply chain in a ‘cap-and-trade’ system," Annals of Operations Research, Springer, vol. 228(1), pages 135-149, May.
    10. David F. Drake & Paul R. Kleindorfer & Luk N. Van Wassenhove, 2016. "Technology Choice and Capacity Portfolios under Emissions Regulation," Production and Operations Management, Production and Operations Management Society, vol. 25(6), pages 1006-1025, June.
    11. Glock, C. H. & Jaber, M. Y. & El Saadany, A., 2013. "Supply Chain Coordination with Emission Reduction Incentives," Publications of Darmstadt Technical University, Institute for Business Studies (BWL) 57672, Darmstadt Technical University, Department of Business Administration, Economics and Law, Institute for Business Studies (BWL).
    12. Dobos, Imre, 2005. "The effects of emission trading on production and inventories in the Arrow-Karlin model," International Journal of Production Economics, Elsevier, vol. 93(1), pages 301-308, January.
    13. Ghosh, Debabrata & Shah, Janat, 2015. "Supply chain analysis under green sensitive consumer demand and cost sharing contract," International Journal of Production Economics, Elsevier, vol. 164(C), pages 319-329.
    Full references (including those not matched with items on IDEAS)

    Citations

    Citations are extracted by the CitEc Project, subscribe to its RSS feed for this item.
    as


    Cited by:

    1. Nidhi Handa & S. R. Singh & Neha Punetha, 2022. "Impact of carbon emission in two-echelon supply chain inventory decision with controllable deterioration and two-level trade-credit period," OPSEARCH, Springer;Operational Research Society of India, vol. 59(4), pages 1555-1586, December.
    2. Sumeet Sahay & Hemant Kumar Kaushik & Shikha Singh, 2023. "Discovering themes and trends in electricity supply chain area research," OPSEARCH, Springer;Operational Research Society of India, vol. 60(3), pages 1525-1560, September.

    Most related items

    These are the items that most often cite the same works as this one and are cited by the same works as this one.
    1. Xu, Song & Fang, Lei, 2020. "Partial credit guarantee and trade credit in an emission-dependent supply chain with capital constraint," Transportation Research Part E: Logistics and Transportation Review, Elsevier, vol. 135(C).
    2. Yang, Huixiao & Luo, Jianwen & Wang, Haijun, 2017. "The role of revenue sharing and first-mover advantage in emission abatement with carbon tax and consumer environmental awareness," International Journal of Production Economics, Elsevier, vol. 193(C), pages 691-702.
    3. Meng, Xiaoge & Yao, Zhong & Nie, Jiajia & Zhao, Yingxue & Li, Zenglu, 2018. "Low-carbon product selection with carbon tax and competition: Effects of the power structure," International Journal of Production Economics, Elsevier, vol. 200(C), pages 224-230.
    4. Xu, Song & Govindan, Kannan & Wang, Wanru & Yang, Wenting, 2024. "Supply chain management under cap-and-trade regulation: A literature review and research opportunities," International Journal of Production Economics, Elsevier, vol. 271(C).
    5. Juanjuan Qin & Liguo Ren & Liangjie Xia, 2017. "Carbon Emission Reduction and Pricing Strategies of Supply Chain under Various Demand Forecasting Scenarios," Asia-Pacific Journal of Operational Research (APJOR), World Scientific Publishing Co. Pte. Ltd., vol. 34(01), pages 1-27, February.
    6. Zhitao Xu & Adel Elomri & Shaligram Pokharel & Fatih Mutlu, 2019. "The Design of Green Supply Chains under Carbon Policies: A Literature Review of Quantitative Models," Sustainability, MDPI, vol. 11(11), pages 1-20, May.
    7. Shaojian Qu & Guoqing Jiang & Ying Ji & Guangming Zhang & Nabe Mohamed, 2021. "Newsvendor’s optimal decisions under stochastic demand and cap-and-trade regulation," Environment, Development and Sustainability: A Multidisciplinary Approach to the Theory and Practice of Sustainable Development, Springer, vol. 23(12), pages 17764-17787, December.
    8. Shoufeng Ji & Dan Zhao & Xiaoshuai Peng, 2018. "Joint Decisions on Emission Reduction and Inventory Replenishment with Overconfidence and Low-Carbon Preference," Sustainability, MDPI, vol. 10(4), pages 1-21, April.
    9. Ata Allah Taleizadeh & Milad Shahriari & Shib Sankar Sana, 2021. "Pricing and Coordination Strategies in a Dual Channel Supply Chain with Green Production under Cap and Trade Regulation," Sustainability, MDPI, vol. 13(21), pages 1-18, November.
    10. Yang, Lei & Hu, Yijuan & Huang, Lijuan, 2020. "Collecting mode selection in a remanufacturing supply chain under cap-and-trade regulation," European Journal of Operational Research, Elsevier, vol. 287(2), pages 480-496.
    11. Yonghong Cheng & Zhongkai Xiong & Qinglin Luo, 2018. "Joint Pricing and Product Carbon Footprint Decisions and Coordination of Supply Chain with Cap-and-Trade Regulation," Sustainability, MDPI, vol. 10(2), pages 1-24, February.
    12. Wen Cheng & Qunqi Wu & Fei Ye & Qian Li, 2022. "The Impact of Government Interventions and Consumer Green Preferences on the Competition between Green and Nongreen Supply Chains," Sustainability, MDPI, vol. 14(10), pages 1-34, May.
    13. Ji, Jingna & Zhang, Zhiyong & Yang, Lei, 2017. "Comparisons of initial carbon allowance allocation rules in an O2O retail supply chain with the cap-and-trade regulation," International Journal of Production Economics, Elsevier, vol. 187(C), pages 68-84.
    14. Qiang Du & Jiajie Zhou, 2022. "Evolution of Low Carbon Supply Chain Research: A Systematic Bibliometric Analysis," IJERPH, MDPI, vol. 19(23), pages 1-20, November.
    15. El Ouardighi, Fouad & Sim, Jeongeun & Kim, Bowon, 2021. "Pollution accumulation and abatement policies in two supply chains under vertical and horizontal competition and strategy types," Omega, Elsevier, vol. 98(C).
    16. Maher Agi & Xinghao Yan, 2020. "Greening products in a supply chain under market segmentation and different channel power structures," Post-Print hal-02898158, HAL.
    17. Li, Zhimin & Pan, Yanchun & Yang, Wen & Ma, Jianhua & Zhou, Ming, 2021. "Effects of government subsidies on green technology investment and green marketing coordination of supply chain under the cap-and-trade mechanism," Energy Economics, Elsevier, vol. 101(C).
    18. Wang, Yuyan & Yu, Zhaoqing & Jin, Mingzhou & Mao, Jiafu, 2021. "Decisions and coordination of retailer-led low-carbon supply chain under altruistic preference," European Journal of Operational Research, Elsevier, vol. 293(3), pages 910-925.
    19. Agi, Maher A.N. & Yan, Xinghao, 2020. "Greening products in a supply chain under market segmentation and different channel power structures," International Journal of Production Economics, Elsevier, vol. 223(C).
    20. Chirantan Mondal & Bibhas C. Giri, 2022. "Analyzing a manufacturer-retailer sustainable supply chain under cap-and-trade policy and revenue sharing contract," Operational Research, Springer, vol. 22(4), pages 4057-4092, September.

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:spr:opsear:v:59:y:2022:i:3:d:10.1007_s12597-021-00569-7. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a bibliographic reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: Sonal Shukla or Springer Nature Abstracting and Indexing (email available below). General contact details of provider: http://www.springer.com .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.