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Manufacturer's product choice in the presence of environment-conscious consumers: brown product or green product

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  • Qi Zhang
  • Qiuhong Zhao
  • Xuan Zhao

Abstract

Nowadays, the brown products are losing market coverage to their green alternatives due to consumers' increasing environmental awareness. Confronted with this threat, many traditional manufacturers currently producing only brown product are contemplating the launch of green product. Base on this background, this paper explores the optimal product choice for the manufacturer. We first derive the optimal results for each product choice. Then we analyse the optimal product choice for the manufacturer. Next, we study how to induce the production of green product. Finally, the fraudulent behaviour on product's environmental attributes is addressed. Main findings are as follows. First, manufacturer's optimal product choice is to produce green product if the investment-to-value ratio and the unit production cost for green product are low and to produce brown product if the investment-to-value ratio and the unit production cost for green product are high. Second, the two-part tariff contract is applicable to stimulate the manufacturer to produce green product under certain conditions. While exterior intervention is necessary under other conditions. Third, when the manufacturer and the retailer diverge in product preference, the manufacturer has a strong incentive to behave fraudulently, and this type of manufacturer needs strict supervision.

Suggested Citation

  • Qi Zhang & Qiuhong Zhao & Xuan Zhao, 2019. "Manufacturer's product choice in the presence of environment-conscious consumers: brown product or green product," International Journal of Production Research, Taylor & Francis Journals, vol. 57(23), pages 7423-7438, December.
  • Handle: RePEc:taf:tprsxx:v:57:y:2019:i:23:p:7423-7438
    DOI: 10.1080/00207543.2019.1624853
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    Cited by:

    1. Gurmeet Singh & Indranil Biswas & Samir K Srivastava, 2023. "Managing supply chain with green and non‐green products: Channel coordination and information asymmetry," Managerial and Decision Economics, John Wiley & Sons, Ltd., vol. 44(2), pages 1359-1372, March.
    2. Mukherjee, Arka & Carvalho, Margarida, 2021. "Dynamic decision making in a mixed market under cooperation: Towards sustainability," International Journal of Production Economics, Elsevier, vol. 241(C).
    3. Li Liu & Zhe Wang & Jiangtao Xu & Zaisheng Zhang, 2023. "Green baton: how government interventions advance green technological innovation," Environment, Development and Sustainability: A Multidisciplinary Approach to the Theory and Practice of Sustainable Development, Springer, vol. 25(10), pages 11121-11152, October.
    4. Biswas, Indranil & Singh, Gurmeet & Tiwari, Sunil & Choi, Tsan-Ming & Pethe, Shivanee, 2024. "Managing Industry 4.0 supply chains with innovative and traditional products: Contract cessation points and value of information," European Journal of Operational Research, Elsevier, vol. 316(2), pages 539-555.
    5. Liu, Xiaoxi, 2024. "The introduction and market expansion effects of green products considering network externalities," Omega, Elsevier, vol. 124(C).
    6. Niu, Baozhuang & Zhang, Nan & Zhang, Jianhua, 2024. "How to Induce Multinational Firms’ Local Sourcing to Break Carbon Lock-in?," European Journal of Operational Research, Elsevier, vol. 315(2), pages 613-625.
    7. Yugang Yu & Xue Li & Xiaoping Xu, 2022. "Reselling or marketplace mode for an online platform: the choice between cap-and-trade and carbon tax regulation," Annals of Operations Research, Springer, vol. 310(1), pages 293-329, March.
    8. Hanli Hu & Yu Cao & Dan Yi & Qingsong Li, 2023. "How to Distribute Green Products in Competition with Brown Products? Direct Selling versus Agent Selling?," Sustainability, MDPI, vol. 15(14), pages 1-22, July.
    9. Zolfagharinia, Hossein & Zangiabadi, Maryam & Hafezi, Maryam, 2023. "How much is enough? Government subsidies in supporting green product development," European Journal of Operational Research, Elsevier, vol. 309(3), pages 1316-1333.
    10. Yanyan Zheng & Jin Zhang & Mengyuan Wang & Peng Liu & Tong Shu, 2023. "Low-Carbon Manufacturing or Not? Equilibrium Decisions for Capital-Constrained News Vendors with Subsidy and Carbon Tax," Sustainability, MDPI, vol. 15(15), pages 1-23, July.
    11. Mojtaba M. Shourkaei & Kelsey M. Taylor & Bruno Dyck, 2024. "Examining sustainable supply chain management via a social‐symbolic work lens: Lessons from Patagonia," Business Strategy and the Environment, Wiley Blackwell, vol. 33(2), pages 1477-1496, February.
    12. Zhang, Ranran & Ma, Weimin & Si, Hongyun & Liu, Jinjin & Liao, Le, 2021. "Cooperative game analysis of coordination mechanisms under fairness concerns of a green retailer," Journal of Retailing and Consumer Services, Elsevier, vol. 59(C).

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