Chain-to-chain competition on product sustainability

This paper studies the game model of two sustainable supply chains under competition in product sustainability, derives the equilibrium structures of the two-chain system and generates the managerial insights. When the supplier and manufacturer within the reverse supply chain are competitive, the sustainability degrees, demands and profits under three structures of this two-chain system are analyzed. It is found that although vertical integration is always a Nash equilibrium, it is Pareto optimal only when the competition degree is low. On the other hand, a more generalized case for the former model is investigated when the supplier and manufacturer are cooperative in bargaining the wholesale price, and the effects of bargaining power to the sustainability degrees, demands, and chain member profits are studied. It is further shown that the structure of vertical integration channels is not an equilibrium unless the two sustainable supply chains are independent. (C) 2014 Elsevier Ltd. All rights reserved.