Mitigating Mutual Free-Riding on Carbon-Abatement in Dual-Channel Supply Chains

Publication Date

1-1-2026

Document Type

Article

Publication Title

IEEE Transactions on Engineering Management

Volume

73

DOI

10.1109/TEM.2026.3688511

First Page

3329

Last Page

3343

Abstract

The widespread adoption of dual-channel distribution has expanded market coverage while increasing logistics-related carbon emissions, and amplified incentives for manufacturers and retailers to free-ride on mutual green investments. This article investigates how mutual free-riding distorts carbon emission reduction (CER) decisions, and whether blockchain-enabled digital certification can restore efficiency in dual-channel green supply chains. We construct a Stackelberg game model to analyze four scenarios: first, manufacturer-led CER with retailer free-riding and no governance; second, manufacturer-led CER with blockchain governance to curb retailer free-riding; third, retailer-led CER with manufacturer free-riding and no governance; four, retailer-led CER with blockchain governance to mitigate manufacturer free-riding. Our findings show that unilateral CER efforts decline with free-riding coefficients, reducing CER and firm profits. However, when blockchain certification costs are high, moderate free-riding can yield Pareto improvements, as the noninvesting party gains expanded margins without bearing abatement costs. Digital certification effectively strengthens CER incentives only when governance fees fall below a threshold determined by channel power, consumer environmental awareness, and price competition intensity. Manufacturer-led governance is viable when the direct channel's market share is moderate and the fee is low, while retailer-led governance requires even lower fees. These findings provide actionable insights for supply chain stakeholders on strategic green investment allocation, certification adoption, and fee negotiation, as well as policy guidance for calibrating digital supervision platforms to mitigate unintended free-riding shifts and reduce supply chain carbon intensity.

Funding Number

23GLB026

Funding Sponsor

Social Science Foundation of Jiangsu Province

Keywords

Carbon-abatement, digital certification, free-riding, green dual-channel supply chain

Department

Global Innovation and Leadership

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