Coordinating a dual-channel supply chain with price discount contracts under carbon emission capacity regulation

• Published in: Applied Mathematical Modelling Vol. 56; pp. 449 - 468
• Main Authors: Xu, Jianteng, Qi, Qi, Bai, Qingguo
• Format: Journal Article
• Language: English
• Published: New York Elsevier Inc 01.04.2018; Elsevier BV
• Subjects: Carbon; Carbon emission capacity; Contracts; Decision analysis; Decisions; Discounts; Dual-channel; Emissions control; On-line systems; Performance enhancement; Price discount; Pricing; Stackelberg game; Studies; Supply chains; Carbon emission capacity; Dual-channel; Stackelberg game; Price discount
• ISSN: 0307-904X; 1088-8691; 0307-904X
• DOI: 10.1016/j.apm.2017.12.018

•How carbon cap regulation affects pricing of dual-channel supply chain is proposed.•The coordination conditions of channel price discount contracts are investigated.•Effects of two price discount contracts are compared by numerical example.•Effects of carbon cap on selection of two price discount contracts are provided. This paper considers the coordination of a dual-channel supply chain under mandatory carbon emission capacity regulation. Market demand is affected by the selling prices in both online and offline channels, and consumers are either brand loyal or retailer loyal. By analyzing the optimal pricing decisions and profits in centralized and decentralized systems, we find that when the carbon emission capacity assigned to a retailer is adequate, the carbon emission constraint placed on the supplier’s emissions has a negative effect on the retailer’s profit. When the carbon emission capacity assigned to a retailer is fully used, a fully used carbon emission capacity for the supplier can decrease the supplier’s profit without affecting the retailer’s profit. To improve the performance of the decentralized system, we propose online channel price discount and offline channel price discount contracts to coordinate the supply chain and provide the conditions under which price discount contracts can coordinate the dual-channel supply chain. Numerical examples are divided into two parts. The first part illustrates the effects of carbon emission capacity and customer loyalty parameters on the decisions of the dual-channel supply chain. The second part demonstrates the approach to find the interval of the price discount coefficient and identifies the coordination effects between two price discount contracts. Some valuable decision suggestions are provided.