Who will take on green product development in supply chains? Manufacturer or retailer

This paper investigates the optimal decisions, profits and social welfare in a green supply chain (GSC) when the manufacturer or retailer conducts green product development. Two Stackelberg game models are constructed here: the manufacturer-led green product development model (MD model) and retailer-led green product development model (RD model), and it is assumed that the green product developer is risk-averse. Then the optimal decisions and members' profits under two models are obtained. Through comparing them, the results show that the product greenness and leader's profit are always higher in MD model, but in which model the retail price, wholesale price and follower's profit are higher/lower is related to the cost coefficient of green product development, the leaders' risk aversion, and demand uncertainty. Moreover, the risk aversion and demand uncertainty have a negative impact on most decisions and profits, but their impact on followers' profits under two models and the wholesale price of RD model are still affected by the cost coefficient of green product development. Finally, numerical experiments are used to compare the total profits and social welfare under two models. The results indicate that in most cases, the GSC's total profit under RD model is higher, but the social welfare under MD model is higher.

Automated summary

This study investigates the optimal decisions, profits, and social welfare in a green supply chain when the manufacturer or retailer conducts green product development. The results show that in the manufacturer-led model, the product greenness and leader's profit are higher, while in the retailer-led model, the retail price and wholesale price may vary.