Low-Carbon supply chain optimisation with carbon emission reduction level and warranty period: nash bargaining fairness concern

Abstract

This study incorporates fairness concern in a low-carbon supply chain coordination mechanism where a single manufacturer sells its product to consumers through a single retailer. We develop four different scenarios of the Stackelberg master-slave game utility model—both members are neutral (NN), the manufacturer (FN) or retailer (NF) has fairness concern, and both are not neutral (FF), where the Nash bargaining fairness reference is leveraged to capture the impact of fairness preference on low-carbon supply chain optimisation decision-making profits, level of carbon emission reduction, warranty period, and revenue-sharing. Finally, numerical studies are conducted to quantify the impact of the Nash bargaining fairness concern. Research shows that: (1) fairness concern made it worse for the retailer but beneficial for the manufacturer and the system. (2) fairness concern causes a reduction in the level of carbon emission reduction and warranty period. However, the reduction of carbon emission reduction trading price and a certain range of revenue sharing effectively reduces the impact of fairness concern on members. (3) The revenue-sharing contract effectively reduces the negative impacts of fairness concern on supply chain members. The paper is a guide for enterprises development and cooperation but also provides empirical evidence for the government.

KEYWORDS:

• Nash bargaining
• fairness concern
• carbon emission reduction
• revenue-sharing contract
• warranty period

Acknowledgments

We would like to thank the editors and the referees for their valuable comments and suggestions, which significantly improved the article.

CRediT authorship contribution statement

Shuai Li: Conceptualisation, Methodology, Software, Formal analysis, Resources, Writing-original draft, Writing-review & editing. Shaojian Qu: Methodology, Formal analysis, Investigation, Data curation, Writing-original draft, Writing – review & editing, Project administration, Funding acquisition. M.I.M. Wahab: Methodology, Formal analysis, Investigation, Data curation, Writing–review & editing, Project administration, Supervision. Ying Ji: Methodology, Formal analysis, Investigation, Data curation, Writing–review & editing, Project administration, Supervision.

Data availability statement

The authors confirm that the data supporting the findings of this study are available within the article.

Disclosure statement

No potential conflict of interest was reported by the author(s).

Notes

1 Comparing BYD’s and Tesla’s new energy vehicles, just from the retail price, BYD, as a national brand, has a natural price advantage, and its sales in China are far more than Tesla’s. Since the introduction of carbon emission reduction, BYD's new energy vehicle sales have exceeded those of new energy fuel vehicles, showing that carbon emission reduction can boost sales by 96.2 percent year-on-year. BYD's warranty for new energy vehicles has been increased from three years and 100,000 km to six years and 150,000 km, and the three electrics are covered by a lifetime warranty, making BYD's new energy vehicles further appealing to 30% of consumers.

Additional information

Funding

This work was supported by National Natural Science Foundation of China: [grant nos. 72171123 and 72171149]; Anhui Province Innovative Team Project: Data-driven Decision Analytics: [grant no 2023AH010022].

Notes on contributors

Shuai Li

Shuai Li is a doctoral student at the School of Management Science and Engineering, Nanjing University of Information Science & Technology, China. His research interests include Supply chain management, Sustainable operations, and Intelligent manufacturing.

Shaojian Qu

Shaojian Qu is a professor at the School of Management Science and Engineering, Nanjing University of Information Science & Technology, China. His research interests include Big data analytics, Robust optimisation, Decision theory and methods, Supply chain management, Portfolio, games, etc.

M.I.M. Wahab

M.I.M. Wahab is a professor at the Department of Mechanical and Industrial Engineering, Toronto Metropolitan University, Canada. His research interests include Real and financial options, Global supply chain design and risk hedging, Supply chain contract, Supply chain flexibility, New product introduction, etc.

Ying Ji

Ying Ji is a professor at the School of Management, Shanghai University, China. His research interests include Supply chain management, Logistics management, Engineering optimisation, Portfolio management, Group decision making, etc.