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Optimal contract design in sustainable supply chain: Interactive impacts of fairness concern and overconfidence

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  • Qinzi Xiao
  • Lin Chen
  • Ming Xie
  • Cheng Wang

Abstract

This article aims to study the interactive impacts of retailer's fairness concern and manufacturer's overconfidence behaviour on optimal contract design in a sustainable two-echelon supply chain. We establish one centralised contract and three decentralised contracts, namely wholesale price contract, revenue-sharing contract, and cost-sharing contract. Considering the retailer's fairness concern, we find that for the low fairness concern intensity, the revenue-sharing contract induces more profit for the entire supply chain. However, for the high fairness concern intensity, the centralised contract will be more profitable. Considering the retailer's fairness concern and the manufacturer's overconfidence behaviour simultaneously, our results show that the cost-sharing contract generates more profit for the retailer when the fairness concern intensity is high. Moreover, the supply chain system achieves the highest profit under the revenue-sharing contract among the three decentralised contracts, which is different from the case that only consider the retailer's fairness concern.

Suggested Citation

  • Qinzi Xiao & Lin Chen & Ming Xie & Cheng Wang, 2021. "Optimal contract design in sustainable supply chain: Interactive impacts of fairness concern and overconfidence," Journal of the Operational Research Society, Taylor & Francis Journals, vol. 72(7), pages 1505-1524, July.
    • Handle: RePEc:taf:tjorxx:v:72:y:2021:i:7:p:1505-1524
    DOI: 10.1080/01605682.2020.1727784
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    Citations

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    Cited by:

    1. Jinhan Yu & Licheng Sun, 2022. "Supply Chain Emission Reduction Decisions, Considering Overconfidence under Conditions of Carbon Trading Price Volatility," Sustainability, MDPI, vol. 14(22), pages 1-18, November.
    2. Li, Qingying & Ma, Manqiong & Shi, Tianqin & Zhu, Chen, 2022. "Green investment in a sustainable supply chain: The role of blockchain and fairness," Transportation Research Part E: Logistics and Transportation Review, Elsevier, vol. 167(C).
    3. Li, Yadong & Guan, Zhenzhong & Ren, Jianbiao, 2023. "Channel coordination under retailer's (sub)conscious preferences of loss aversion and fairness," Journal of Retailing and Consumer Services, Elsevier, vol. 74(C).
    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. Congjun Rao & Yue Gao, 2022. "Evaluation Mechanism Design for the Development Level of Urban-Rural Integration Based on an Improved TOPSIS Method," Mathematics, MDPI, vol. 10(3), pages 1-32, January.
    6. Varun Sharma & Alok Raj & Abhishek Chakraborty, 2023. "Analysis of power dynamics in sustainable supply chain under non-linear demand setup," Operations Management Research, Springer, vol. 16(1), pages 18-32, March.
    7. Qiurui Liu & Juntian Huang & Ting Ni & Lin Chen, 2022. "Measurement of China’s Building Energy Consumption from the Perspective of a Comprehensive Modified Life Cycle Assessment Statistics Method," Sustainability, MDPI, vol. 14(8), pages 1-19, April.
    8. Xuemei Zhang & Jian Cao & Yang Zhao & Jiansha Lu, 2022. "Fairness Concern in Remanufacturing Supply Chain—A Comparative Analysis of Channel Members’ Fairness Preferences," Sustainability, MDPI, vol. 14(7), pages 1-23, March.
    9. Li, Zhong-Ping & Wang, Jian-Jun & Perera, Sandun & Shi, Jim (Junmin), 2022. "Coordination of a supply chain with Nash bargaining fairness concerns," Transportation Research Part E: Logistics and Transportation Review, Elsevier, vol. 159(C).
    10. Tang, Ruihong & Yang, Lei & Ji, Jingna, 2023. "Impacts of fairness concerns on financing equilibrium in a low-carbon supply chain," Transportation Research Part E: Logistics and Transportation Review, Elsevier, vol. 180(C).

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