PRICING AND GREENING POLICIES IN A GREEN AND NONGREEN PRODUCTS SUPPLY CHAIN: A GAME THEORETIC APPROACH

Nowadays, policymakers, organizations, businesses and even ordinary people are concerned about the environment and related issues. Considering environmental issues has led to complexity in supply chains; in recent years, green supply chains have received more and more attention from policy makers, academics, and scientists. Businesses consider environmental issues in their supply chains for a variety of reasons, including government pressure, popular demand, wanting to increase their market share, and attracting new customers. The present study considers a supply chain consisting of one manufacturer and two retailers. The manufacturer produces two products, one green and the other nongreen. Based on its policies and to protect the environment, the government imposes a tax on the nongreen product. We discuss pricing and greening policies for the manufacturer in a green and nongreen supply chain. Game theory is utilized to derive optimal pricing policies for the manufacturer and retailers and the optimal green level of the green product for the manufacturer in both the centralized and decentralized models. The effects of government intervention in the supply chain are also investigated. Finally, numerical examples and sensitivity analyses are presented. The results show that there are unique optimal retail prices for retailers, unique optimal wholesale price, and an optimal green level for the manufacturer in the decentralized model. Also, there are unique optimal retail prices and an optimal green level for the supply chain in the centralized model. The findings also show that the supply chain members' profits are highly dependent on the values of some model parameters, such as demand price elasticity, the cost coefficient of the green degree per unit, and the tax imposed by the government. The results also show that the government can increase or decrease the green level of the green product by changing the amount of the tax and different government policies have significant impacts on the profit of the supply chain members as well as on the environment.