Who Drives Green Innovation? A Game Theoretical Analysis of a Closed-Loop Supply Chain under Different Power Structures

Abstract

As awareness of environmental protection increases worldwide, enterprises have been building their supply chains in ways that conserve natural resources and minimize the creation of pollutants. One of the practical ways to make supply chains more sustainable is for enterprises to utilize green innovation strategies and to increase resource reuse. In this work, we focus on a closed-loop supply chain (CLSC) consisting of a manufacturer, a retailer, and a collector. In the investigated CLSC, the manufacturer and the retailer drive the green innovation strategy either individually or simultaneously to boost market demand. In the reverse flow of the CLSC, the collector is responsible for collecting consumers’ used products and transferring them to the manufacturer for remanufacturing. By combining two types of the market leadership and three types of green innovation strategies, we establish six different Stackelberg game models and solve them analytically. Through an extensive comparative analysis, we show who should have market leadership and who should drive the green innovation strategy in the CLSC. Various numerical examples are also given to support our major findings. One of our key findings suggests that the supply chain members must participate in green innovation activities at the same time to achieve a win-win scenario in the CLSC.

A Bibliometric Review of Two Decades’ Research on Closed-Loop Supply Chain: 2001-2020

“…Stochastic approach is the most popular method at present. In addition, we know that Cluster0 and Cluster2 are newly formed Clusters, which means that "game theory" [67]- [73], "remanufacturing" [74]- [81], and "outsourcing" [82], [83] are the hot spots in recent CLSC research. 0 Clustering-Most scholars use game theory to study the problems in the CLSC, Among the top 10 most cited references, there are 4 articles in this cluster.…”

How do firms achieve sustainability through green innovation under external pressures of environmental regulation and market turbulence?

“…However, more and more enterprises are recognizing the importance of and need for green innovation due to external pressures. Numerous academics and professionals believe that corporate green innovation mainly occurs in the presence of two main external pressures exerted by governments and markets (Lee, 2020; Qi, Zeng, Chiming, Yin, & Zou, 2013): environmental regulation and market turbulence.…”

Joint Capacity Investment, Collecting and Pricing Decisions in a Capacity Constraint Closed-Loop Supply Chain Considering Cooperation

“…The results show that remanufacturing activities can stimulate consumption. Comprising one manufacturer, one supplier and one third-party collector, a CLSC in which used products from the market are recycled is addressed by Wang et al [15,16] and Lee [17]. Wang et al [15] assume that the supplier and the collector are competitive, and the optimal recycling strategies are derived.…”

“…Wang et al [15] assume that the supplier and the collector are competitive, and the optimal recycling strategies are derived. Lee [17] establishes and analyzes six different Stackelberg game models. A comparison and analysis reveal that the CLSC's win-win situation must be based on the premise that all members participate in green activities.…”