Reconciling conflict of interests in a green retailing channel with green sales effort |
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Institution: | 1. School of Industrial Engineering, College of Engineering, University of Tehran, Iran;2. School of Business and Economics, RWTH Aachen University, Aachen, Germany;3. Centre for Research in Sustainable Supply Chain Analytics, Rowe School of Business, Dalhousie University, Halifax, NS, Canada;1. Stephen F. Austin State University, United States;2. University of Kentucky, United States;3. The Pennsylvania State University Abington, United States;1. Research Centre in Management and Economics (CEGE), Catolica Porto Business School, Catholic University of Portugal, Rua de Diogo Botelho, 1327, 4169-005, Porto, Portugal;2. School of Economics and Management, University of Minho, 4710-057, Braga, and CICS.NOVA.UMinho, Portugal;1. Korea National Industrial Convergence Center, Korea Institute of Industrial Technology, Republic of Korea;2. Department of Management Information Systems, Dong-A University, Republic of Korea;3. Department of Interaction Science, Sungkyunkwan University, Republic of Korea;4. Department of Human-Artificial Intelligence Interaction, Sungkyunkwan University, Republic of Korea;1. Sauder School of Business, University of British Columbia (UBC), Vancouver, British Columbia, V6T 1Z2, Canada;2. Rowe School of Business, Dalhousie University, Halifax, NS, B3H 4R2, Canada |
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Abstract: | In this paper, we address conflicting objectives in a two-echelon retailer-manufacturer green retailing channel (GRC) with two types of substitutable green and non-green products. In the investigated model, the government pays (charges) the manufacturer a certain amount of subsidies (penalties) for producing green (non-green) products. The retailer can implement a green sales effort program to encourage customers to purchase green items instead of non-green products. In so doing, the retailer can transfer an uncertain amount of non-green demand to the green demand, while the total demand over both products remains constant. However, while producing green products is advantageous for the manufacturer due to governmental interventions, this is not the case for the retailer. To mitigate this conflict, we develop a game-theoretical model and a coordination mechanism that reconciles both members' interests. By applying the novel revenue-cost sharing along with a buyback (RCS&B) contract as an incentive mechanism, we mitigate conflicts and coordinate ordering and sales effort decisions throughout the channel. Our results show that the RCS&B contract may be quite effective in managing conflicting objectives toward aligning both GRC members’ interests. The proposed contract creates an economically viable, ambidextrous GRC by devising Pareto-improving solutions. |
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Keywords: | Green supply chain coordination Optimization Green marketing Sustainable product Cost and revenue sharing contract |
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