Document Type

Article

Publication Date

August 2019

Publication Title

International Journal of Production Research

DOI

10.1080/00207543.2019.1657249

ISSN

0020-7543

Keywords

Green product design, fairness concern, retailing competition, circular economy

Disciplines

Business

Abstract

In this paper, we consider green product design in a supply chain consisting of one manufacturer and two retailers, where retailer 1 aims at monetary profit maximisation, and retailer 2 has fairness concern. We consider two kinds of green products: a marginal-intensive green product (MIGP) and a development-intensive green product (DIGP). For the former, the green investment cost depends on the green level and the production quantity; while for the latter, the green investment cost depends on the green level solely. In each case, we investigate the impact of the retailer’s fairness concern by comparing the optimal solutions and supply chain performance with those in the basic models in which all the supply chain members aim at profit maximisation. We find that retailer 2 will set a higher retailing price and earn a smaller market share. Such inferiority increases as retailer 2’s inequity aversion increases or as the substitutability degree of the products offered by the two retailers increases. We also find that retailer 2’s fairness concern will always harm the manufacturer. If an equity outcome is achieved, the supply chain may achieve a better performance; however, if an inequity outcome is attained, the supply chain always performs worse.

Comments

This is an Accepted Manuscript of an article published by Taylor & Francis in International Journal of Production Research on 29 August 2019, available online: http://www.tandfonline.com/10.1080/00207543.2019.1657249
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