Green or non‐green product: A game‐theoretic framework to make optimal decision in a two‐level supply chain

Abstract

This paper aims to discuss the decisions made by the retailer and manufacturer in a supply chain about pricing, green level, and quality of a product. The centralized model and the manufacturer‐led Stackelberg gaming model are developed for a conventional product and its environmentally friendly version. The two green models are subsequently compared with two non‐green models. Finally, a comprehensive variation of the model is considered, accounting for both green and non‐green products. The green‐only supply chain generates higher profit than the one that uses non‐green products. A revenue‐sharing contract is also employed to coordinate the supply chain.