Product Greenness and Pricing Strategy of Supply Chain Incorporating Asymmetric Heterogeneous Preferences

The decision making of product greenness and pricing strategy is important to achieve sustainable competitiveness of supply chain systems. Behavioral studies find that individual preferences, such as altruism and fairness, can affect the decision and performance of the supply chain significantly. However, the previous widely adopted assumption contradicts the private, asymmetric, and diverse behaviors in reality. This paper considers a green supply chain with asymmetric heterogeneous preferences, in which the manufacturer does not know whether the behavioral type of the retailer is self-interest or altruistic. The optimal decisions on product greenness and pricing strategy of the supply chain under asymmetric heterogeneous preferences are obtained with a game analytic model of incomplete information. The impact of asymmetric preferences on product greenness, price, and supply chain performance is attained by comparing the results under symmetric and asymmetric scenarios. How heterogeneous preferences change the impact of asymmetric preferences is presented with sensitivity analysis. The case study illustrates and verifies the impact of asymmetric preferences, and its sensitivity with respect to heterogeneous preferences. The findings show that asymmetric preferences will reduce the product greenness and wholesale price decided by the manufacturer, will enhance the retail price decided by the self-interest retailer, and meanwhile reduce that decided by the altruistic retailer. Moreover, asymmetric preferences will decrease the manufacturer's profit, reduce the self-interest retailer's profit, and enhance the altruistic retailer's profit while reducing the altruistic retailer's utility. Their influence extents will increase in the heterogeneity of preferences with few exceptions in cases of the self-interest retailer's profit and the altruistic retailer's utility. The theoretical findings generate some managerial implications, by which for example it is necessary to adjust promptly the estimation about the behavior types of supply chain partners.

Automated summary

This study examines the impact of asymmetric heterogeneous preferences on the decision making of product greenness and pricing strategies within a green supply chain, finding that these preferences can significantly affect the profits and utilities of supply chain partners. Moreover, the influence of asymmetric preferences is exacerbated by the heterogeneity of preferences.