Paper #64
Coordinating Emission Reduction in a Multi-Supplier Green Supply Chain
Presenting author: Hexin Wang
Session: O15
Abstract
This paper studies coordination of emission reduction in a green supply chain with one manufacturer and multiple heterogeneous suppliers. Suppliers bear abatement investment costs while the demand benefit from a greener final product is shared across the channel. We develop an analytical game model with endogenous retail pricing and fixed abatement investment costs. The results show that decentralized decisions reduce total supply chain profit and misalign abatement incentives but may induce higher abatement than the centralized benchmark when high-margin low-cost suppliers over-invest in abatement capability. We then design two second-best overlay contracts cost sharing and manufacturer subsidy that operate on top of existing wholesale prices. The multi-supplier structure matters because the two contracts aggregate supplier heterogeneity differently and create cross-supplier demand spillovers. Numerical results compare both profit recovery and abatement proximity to the centralized benchmark.