The green supply chains’ ordering and pricing competition under carbon emissions regulations of the government

Abstract

As policymakers and governments in recent years have imposed various policies on industrial sectors to combat climate change, firms are required to manage their carbon footprints throughout their supply chains, alongside other operational decisions. This paper studies pricing and ordering competition between two green supply chains while considering carbon emissions regulations. In this context, the paper proposes a Stackelberg game among a governmental agency and two competitive green supply chains. The government seeks to maximise social welfare by imposing carbon policies, including carbon cap, carbon tax, and cap-and-trade. Each supply chain contains a manufacturer and multiple retailers. There is a Bertrand Nash competition between supply chains in different markets. The vendor-managed inventory (VMI) mechanism has been deployed to coordinate the supply chain and boost profitability. This paper develops mathematical models based on the supply chains’ structures and carbon policies. It provides a series of insights that highlight the impact of carbon regulations on price, ordering size, transportation cycle, carbon emissions, and social welfare.

KEYWORDS:

• Green supply chain
• price competition
• vendor managed inventory
• Stackelberg game
• carbon policy

Disclosure statement

No potential conflict of interest was reported by the author(s).

Notes

1 https://www.carbontrust.com/resources/reports/footprinting/carbon-footprints-in-the-supply-chain-the-next-step-for-business/

2 https://www.carbontrust.com/resources/reports/footprinting/product-carbon-footprinting-the-new-business-opportunity/

Additional information

Notes on contributors

Kourosh Halat

Kourosh Halat received the MSc and PhD degrees in industrial engineering from K.N. Toosi University of Technology in 2013 and Azad University, South Tehran Branch, Iran in 2020, respectively. He has published several academic articles in major international journals including Computers & Industrial Engineering and Applied Mathematical Modelling. His current research interests focus on green supply chain management, sustainable production, policy-making, mathematical modelling, and applied game theory.

Ashkan Hafezalkotob

Ashkan Hafezalkotob received the MSc and PhD degrees in industrial engineering from the Iran University of Science and Technology, Tehran, Iran, in 2007 and 2012, respectively. He is currently an Associate Professor and the Head of Department of Operational Research (PhD) and the Head of Department of Logistics and Supply Chain (MSc) with the College of Industrial Engineering, Islamic Azad University (South Tehran Branch), Tehran, Iran where he is also a member of Young Researchers and Elite Club. He has authored over 100 peer-reviewed papers, many in highly ranked international journals, including IEEE Transaction on Cybernetics, Information Fusion, Information Sciences, International Journal of Production Economics, Transportation, Research Part E: Logistics and Transportation Review, Journal of Cleaner Production, Expert Systems With Applications, Applied Soft Computing, Engineering Applications of Artificial Intelligence, Computers & Industrial Engineering, Applied Mathematical Modelling, Applied Mathematics and Computation, Materials & Design, Computers and Electronics in Agriculture, and Journal of Manufacturing. His current research interests include environmental policy-making, game theory, supply chain management, multi-criteria decision-making with uncertainty, optimisation, mathematical modelling, and circular economy. Dr. Hafezalkotob was a recipient of the ‘Researcher of the Year: 2016 Award’ and ‘Researcher of the Year: 2020 Award’ from Azad University (South Tehran Branch), Tehran, Iran.

Mohammad Kazem Sayadi

Mohammad Kazem Sayadi, PhD, is an Assistant Professor at ICT Research Institute, Tehran, Iran. Researching in supply chain management, emerging technologies such as Block-chain, IoT, Big Data and AI, and Operational Research, he has published many academic articles in major journals. He is involved in several research projects associated with supply chain management and emerging technologies' policy making.