Implications of risk-averse manufacturer on coordination of green supply chain with mixed carbon policies

Abstract

Purpose

This paper intends to address the decision-making and coordination of green supply chain (GSC) considering risk-averse manufacturers under mixed carbon policy.

Design/methodology/approach

This paper focuses on a GSC consisting of a manufacturer and a retailer, in which the manufacturer is risk-averse (R-A). This paper employs Stackelberg game theory and mean variance analysis to assess the pricing decision-making process under various scenarios. Furthermore, cost-sharing contracts are introduced to coordinate the GSC.

Findings

The research results suggest that the green level of the product and the profit of the GSC under a centralized scenario are higher than those under a decentralized scenario, while the retail price is lower. Under the decentralized scenario, the green level of product, wholesale price and manufacturer’s profit in the R-A scenario are lower than the values in the risk-neutrality scenario, while retailer's profit is higher. In addition, when a cost-sharing contract is utilized for coordination in the GSC, it can lead to Pareto improvement, regardless of whether the manufacturer makes risk-neutrality or R-A decisions.

Originality/value

This research provides a deeper understanding of GSC decision-making and coordination strategy under mixed carbon policy with consideration of R-A from a theoretical perspective and provides decision support for enterprises to choose strategies in practice.