Online promotion format selection for a supply chain with environment responsibility in an uncertain market

Abstract

Corporate environmental responsibility has received considerable attention, but how different online promotion formats and pricing sequences affect enterprises’ incentives in their fulfillment of environmental responsibilities and achievement of profitability has not yet been fully understood. In our study, we consider a supply chain in which a manufacturer invests in green technology to decrease the carbon footprint. The main issue addressed here is how the manufacturer selects the optimal online selling format between agency selling and reselling to ensure profitability with a lower carbon footprint. In an uncertain market with considering the pricing sequence in traditional channel and online channel, we explore six scenarios under the dual-channel promotion, and meanwhile discuss the benchmark scenario without introducing online promotion. The results show that the pricing sequence under agency selling format will not have any impact on the equilibrium green degree and pricing strategies, whereas it may result in a improved green degree in reselling format, even higher than it under the agency selling. Further- more, under the interaction of uncertain demand, pricing sequence and green technology investment, we reveal that the agent selling is not always superior to the reselling with a double-marginalization effect, which contrary to the general intuition. Specifically, in an optimistic market, the manufacture is more profitable in reselling format when the promotion price set in online channel prior to traditional channel, and in a pessimistic market, the opposite pricing sequence formulated will bring a considerable benefit to the manufacture.