Channel coordination of a two-echelon sustainable supply chain with a fair-minded retailer under cap-and-trade regulation

Xiaohu Qian, Tung Sun Chan, J.H. Zhang, M.Q. Yin (Corresponding Author), Q. Zhang

Research output: Journal article publicationJournal articleAcademic researchpeer-review

53 Citations (Scopus)


With the growing level of public environmental consciousness, sustainability has become an important issue in the area of supply chain management. This paper focuses on a channel coordination problem in a two-echelon sustainable supply chain involving one socially responsible manufacturer and one fair-minded retailer. Constructing mathematical models to characterize the problem, four particular contracts are developed to investigate the environmental performance and channel profit under the framework of two non-cooperative contracts: wholesale price and two-part tariff, and two cooperative contracts: Nash bargaining and Rubinstein bargaining. Theoretical analysis verified by numerical experiments shows that the wholesale price contract performs worse than the other three in terms of the carbon emission per unit product and channel profit. In addition, the two-part tariff contract can partially coordinate the supply chain, whereas both bargaining contracts can achieve perfect coordination to provide outcomes of the centralized decision. Comparing with the fair-neutral scenarios, we find that the fairness behavior promotes the retailer’s profit, but reduces the manufacturer’s profit under different contracts. Sensitivity analysis reveals that with intensified fairness concerns, the sustainability level and channel profit diminish under non-cooperative contracts, but remain the same under cooperative contracts. The Nash bargaining and Rubinstein bargaining contracts are robust to the degree of the retailer’s fairness behavior and could be the best choice for the socially responsible manufacturer.
Original languageEnglish
Article number118715
Pages (from-to)1-21
Number of pages21
JournalJournal of Cleaner Production
Publication statusPublished - 20 Jan 2020


  • Channel coordination
  • Cooperative contracts
  • Fairness behavior
  • Non-cooperative contracts
  • Sustainable supply chain

ASJC Scopus subject areas

  • Renewable Energy, Sustainability and the Environment
  • Environmental Science(all)
  • Strategy and Management
  • Industrial and Manufacturing Engineering


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