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A Distributional Robust Analysis of Buyback and Cap-and-Trade Policies

Author

Listed:
  • Fakhrabadi, Mahnaz

    (Dept. of Business and Management Science, Norwegian School of Economics)

  • Sandal, Leif K.

    (Dept. of Business and Management Science, Norwegian School of Economics)

Abstract

This study delves into a dynamic Stackelberg game comprised of a manufacturer and a retailer, operating in an environment with fluctuating demand and price-dependent consumer behavior. The multi-period optimization challenges the manufacturer to strategically set wholesale and buyback prices, while the retailer determines the retail price and order quantities within a single contract. In this dynamic framework, the players operate under the constraints of a cap-and-trade policy, with limited knowledge of demand distributions, characterized only by mean and standard deviation parameters. To address this inherent uncertainty, we employ a distributionally robust approach. Additionally, we explore the enduring effects of historical decisions on present-day demand, reflecting a memory-like market behavior. Through numerical examples, we illuminate the influence of buyback contracts and cap-and-trade policies on decision-making processes within this setting.

Suggested Citation

  • Fakhrabadi, Mahnaz & Sandal, Leif K., 2024. "A Distributional Robust Analysis of Buyback and Cap-and-Trade Policies," Discussion Papers 2024/5, Norwegian School of Economics, Department of Business and Management Science.
    • Handle: RePEc:hhs:nhhfms:2024_005
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    File URL: https://hdl.handle.net/11250/3118619
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    References listed on IDEAS

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    1. 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.
    2. Feng, Hairong & Zeng, Yinlian & Cai, Xiaoqiang & Qian, Qian & Zhou, Yongwu, 2021. "Altruistic profit allocation rules for joint replenishment with carbon cap-and-trade policy," European Journal of Operational Research, Elsevier, vol. 290(3), pages 956-967.
    3. Liangjie Xia & Tingting Guo & Juanjuan Qin & Xiaohang Yue & Ning Zhu, 2018. "Carbon emission reduction and pricing policies of a supply chain considering reciprocal preferences in cap-and-trade system," Annals of Operations Research, Springer, vol. 268(1), pages 149-175, September.
    Full references (including those not matched with items on IDEAS)

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    More about this item

    Keywords

    Cap-and-Trade Policy; Multi-Period Stackelberg Game; Distributional-Robust Demand; Single Contract; Buyback Contract; Sustainability;
    All these keywords.

    JEL classification:

    • C61 - Mathematical and Quantitative Methods - - Mathematical Methods; Programming Models; Mathematical and Simulation Modeling - - - Optimization Techniques; Programming Models; Dynamic Analysis
    • C62 - Mathematical and Quantitative Methods - - Mathematical Methods; Programming Models; Mathematical and Simulation Modeling - - - Existence and Stability Conditions of Equilibrium
    • C63 - Mathematical and Quantitative Methods - - Mathematical Methods; Programming Models; Mathematical and Simulation Modeling - - - Computational Techniques
    • C72 - Mathematical and Quantitative Methods - - Game Theory and Bargaining Theory - - - Noncooperative Games
    • C73 - Mathematical and Quantitative Methods - - Game Theory and Bargaining Theory - - - Stochastic and Dynamic Games; Evolutionary Games
    • D81 - Microeconomics - - Information, Knowledge, and Uncertainty - - - Criteria for Decision-Making under Risk and Uncertainty
    • Q52 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Environmental Economics - - - Pollution Control Adoption and Costs; Distributional Effects; Employment Effects

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