TY - JOUR

T1 - Pricing and investment in manufacturing and logistics when environmental reputation matters

AU - Парилина, Елена Михайловна

AU - Yao, Fanjun

AU - Zaccour, Georges

N1 - Export Date: 11 March 2024 Адрес для корреспонденции: Yao, F.; School of Management and Economics, China; эл. почта: yaofanjun@126.com Сведения о финансировании: GZC20233393 Сведения о финансировании: Natural Sciences and Engineering Research Council of Canada, NSERC, RGPIN-2021-02462 Сведения о финансировании: National Natural Science Foundation of China, NSFC, 72171126 Текст о финансировании 1: Elena Parilina’s research was supported by the National Natural Science Foundation of China under Grant [No. 72171126 ]. Fanjun Yao’s research was supported by the Postdoctoral Fellowship Program of CPSF under Grant [No. GZC20233393 ]. Georges Zaccour’s research was supported by The Natural Sciences and Engineering Research Council of Canada under Grant [ RGPIN-2021-02462 ]. Пристатейные ссылки: Amit, R., Petroleum reservoir exploitation: switching from primary to secondary recovery (1986) Oper. Res., 34 (4), pp. 534-549; Andre, F.J., Sokri, A., Zaccour, G., Public Disclosure Programs vs. traditional approaches for environmental regulation: Green goodwill and the policies of the firm (2011) European J. Oper. Res., 212 (1), pp. 199-212; Arguedas, C., Cabo, F., Martín-Herrán, G., Optimal pollution standards and non-compliance in a dynamic framework (2017) Environ. Res. Econ., 68 (3), pp. 537-567; Badrinath, S.G., Bolster, P.J., The role of market forces in EPA enforcement activity (1996) J. Regul. Econ., 10 (2), pp. 165-181; Boucekkine, R., Krawczyk, J.B., Vallée, T., Environmental quality versus economic performance: A dynamic game approach (2011) Optim. Control Appl. Methods, 32 (1), pp. 29-46; Boucekkine, R., Pommeret, A., Prieur, F., Technological vs ecological switch and the environmental Kuznets Curve (2013) Am. J. Agricul. Econ., 95 (2), pp. 252-260; Boucekkine, R., Saglam, C., Vallée, T., Technology adoption under embodiment: a two-stage optimal control approach (2004) Macroecon. Dyn., 8 (2), pp. 250-271; Cai, Y.J., Choi, T.M., Feng, L., Li, Y., Producer's choice of design-for-environment under environmental taxation (2022) European J. Oper. Res., 297 (2), pp. 532-544; Chen, Y., Li, B., Zhang, G., Bai, Q., Quantity and collection decisions of the remanufacturing enterprise under both the take-back and carbon emission capacity regulations (2020) Transp. Res. E, 141; Chenavaz, R.Y., Eynan, A., Advertising, goodwill, and the Veblen effect (2021) European J. Oper. Res., 289 (2), pp. 676-682; Cheng, F., Chen, T., Chen, Q., Cost-reducing strategy or emission-reducing strategy? The choice of low-carbon decisions under price threshold subsidy (2022) Transp. Res. E, 157; De, S.K., Bhattacharya, K., Bhattacharya, P.P., Nayak, P.K., Joardar, S., Solution of a pollution sensitive supply chain model for novel strategic fuzzy game via Bernoulli trial (2022) Comput. Oper. Res., 144; De Frutos, J., Martín-Herrán, G., Spatial vs. non-spatial transboundary pollution control in a class of cooperative and non-cooperative dynamic games (2019) European J. Oper. Res., 276 (1), pp. 379-394; De Giovanni, P., Smart Supply Chains with vendor managed inventory, coordination, and environmental performance (2021) European J. Oper. Res., 292 (2), pp. 515-531; Dong, C., Liu, Q., Shen, B., To be or not to be green? Strategic investment for green product development in a supply chain (2019) Transp. Res. E, 131, pp. 193-227; Dou, G., Choi, T.M., Does implementing trade-in and green technology together benefit the environment? (2021) European J. Oper. Res., 295 (2), pp. 517-533; Feng, T., Chen, X., Ma, J., Sun, Y., Du, H., Yao, Y., Chen, Z., Mi, Z., Air pollution control or economic development? Empirical evidence from enterprises with production restrictions (2023) J. Environ. Manag., 336; Foulon, J., Lanoie, P., Laplante, B., Incentives for pollution control: regulation or information? (2002) J. Environ. Econ. Manag., 44 (1), pp. 169-187; Fowlie, M., Emissions trading, electricity restructuring, and investment in pollution abatement (2010) Amer. Econ. Rev., 100 (3), pp. 837-869; Grass, D., Hartl, R.F., Kort, P.M., Capital accumulation and embodied technological progress (2012) J. Optim. Theory Appl., 154 (2), pp. 588-614; Grimmer, M., Bingham, T., Company environmental performance and consumer purchase intentions (2013) J. Bus. Res., 66 (10), pp. 1945-1953; Hamilton, J.T., Pollution as news: Media and stock market reactions to the toxics release inventory data (1995) J. Environ. Econ. Manag., 28 (1), pp. 98-113; Jiang, K., Zhang, L., Zhang, X., Wang, Y., Sustainable implementation of the carbon-labeling policy with customer participation and government supervision (2023) Comput. Ind. Eng., 178; Jørgensen, S., Martín-Herrán, G., Zaccour, G., Dynamic games in the economics and management of pollution (2010) Environ. Model. Assess., 15 (6), pp. 433-467; Jørgensen, S., Zaccour, G., Incentive equilibrium strategies and welfare allocation in a dynamic game of pollution control (2001) Automatica, 37 (1), pp. 29-36; Jørgensen, S., Zaccour, G., Time consistent side payments in a dynamic game of downstream pollution (2001) J. Econ. Dyn. Control, 25 (12), pp. 1973-1987; Klassen, R.D., McLaughlin, C.P., The impact of environmental management on firm performance (1996) Manag. Sci., 42 (8), pp. 1199-1214; Konar, S., Cohen, M.A., Information as regulation: The effect of community right to know laws on toxic emissions (1997) J. Environ. Econ. Manag., 32 (1), pp. 109-124; Kriström, B., Lundgren, T., Abatement investments and green goodwill (2003) Appl. Econ., 35 (18), pp. 1915-1921; Liu, B., De Giovanni, P., Green process innovation through Industry 4.0 technologies and supply chain coordination (2019) Ann. Oper. Res.; Lu, Z., Li, H., Does environmental information disclosure affect green innovation? (2023) Econ. Anal. Policy, 80, pp. 47-59; Lundgren, T., A real options approach to abatement investments and green goodwill (2003) Environ. Res. Econ., 25 (1), pp. 17-31; Luo, Y., Xiong, G., Mardani, A., Environmental information disclosure and corporate innovation: The Inverted U-shaped regulating effect of media attention (2022) J. Bus. Res., 146, pp. 453-463; Ma, S., He, Y., Gu, R., Li, S., Sustainable supply chain management considering technology investments and government intervention (2021) Transp. Res. E, 149; Martín-Herrán, G., Sokri, A., Zaccour, G., Dynamic oligopoly competition with public environmental information disclosure (2007) Contributions Game Theory Manag., 1, pp. 326-345; Mason, C.F., An economic model of ecolabeling (2006) Environ. Model. Assess., 11 (2), pp. 131-143; Menezes, F.M., Pereira, J., Emissions abatement R & D: Dynamic competition in supply schedules (2017) J. Public Econ. Theory, 19 (4), pp. 841-859; Morgan, B., 101 Companies committed to reducing their carbon footprint (2019), Forbes, August 26 2019; Moser, E., Seidl, A., Feichtinger, G., History-dependence in production-pollution-trade-off models: a multi-stage approach (2014) Ann. Oper. Res., 222 (1), pp. 457-481; Poyago-Theotoky, J., Optimal environmental taxation, R & D subsidization and the role of market conduct (2003), Finnish Economic Papers, Finnish Economic Association, 16 (1) 15-26; Saglam, C., Optimal pattern of technology adoptions under embodiment: A multistage optimal control approach (2011) Optim. Control Appl. Methods, 32 (5), pp. 574-586; Schlosser, R., Chenavaz, R.Y., Dimitrov, S., Circular economy: Joint dynamic pricing and recycling investments (2021) Int. J. Prod. Econ., 236; Shi, D., Bu, C., Xue, H., Deterrence effects of disclosure: The impact of environmental information disclosure on emission reduction of firms (2021) Energy Econ., 104; Sim, J., Kim, B., Regulatory versus consumer pressure and retailer responsibility for upstream pollution in a supply chain (2021) Omega, 101; Simionescu, M., Strielkowski, W., Gavurova, B., Could quality of governance influence pollution? Evidence from the revised Environmental Kuznets Curve in Central and Eastern European countries (2022) Energy Rep., 8, pp. 809-819; Stephan, M., Environmental information disclosure programs: they work, but why? (2002) Soc. Sci. Q., 83 (1), pp. 190-205; Stimming, M., Capital-accumulation games under environmental regulation and duopolistic competition (1999) J. Econ., 69 (3), pp. 267-287; Stimming, M., Capital accumulation subject to pollution control: Open-loop versus feedback investment strategies (1999) Ann. Oper. Res., 88, pp. 309-336; Tang, W., Du, S., Hu, L., Wang, B., Zhu, Y., The effects of leadership in Clean Development Mechanism low-carbon operations (2022) Transp. Res. E, 158; Tietenberg, T., Disclosure strategies for pollution control (1998) Environ. Res. Econ., 11 (3), pp. 587-602; Tomiyama, K., Two-stage optimal control problems and optimality conditions (1985) J. Econom. Dynam. Control, 9 (3), pp. 317-337; Walter, J.M., Understanding the dynamics of clean technology: implications for policy and industry (2018) Environ. Econ. Policy Stud., 20 (2), pp. 365-386; Wang, L., Li, M., Wang, W., Gong, Y., Xiong, Y., Green innovation output in the supply chain network with environmental information disclosure: An empirical analysis of Chinese listed firms (2023) Int. J. Prod. Econ., 256; Wang, X., Sethi, S.P., Chang, S., Pollution abatement using cap-and-trade in a dynamic supply chain and its coordination (2022) Transp. Res. E, 158; Wei, L., Zhang, J., Dai, R., Zhu, G., Green flexible vs. inflexible capacity strategies for duopoly (2019) Transp. Res. E, 122, pp. 247-267; Wu, P., Jin, Y., Shi, Y., Shyu, H., The impact of carbon emission costs on manufacturers’ production and location decision (2017) Int. J. Prod. Econ., 193, pp. 193-206; Xu, X., Choi, T.M., Supply chain operations with online platforms under the cap-and-trade regulation: Impacts of using blockchain technology (2021) Transp. Res. E, 155; Yao, F., Parilina, E., Zaccour, G., Gao, H., Accounting for consumers’ environmental concern in supply chain contracts (2022) European J. Oper. Res., 301 (3), pp. 987-1006; Yu, E.P.Y., Guo, C.Q., Luu, B.V., Environmental, social and governance transparency and firm value (2018) Bus. Strategy Environ., 27 (7), pp. 987-1004

PY - 2024/4/1

Y1 - 2024/4/1

N2 - We consider pricing and manufacturing and logistics investment decisions by a manufacturer facing environmentally concerned consumers. Demand depends on the price and manufacturer's environmental performance comparatively to the industry. As environmental reputation can only be built over time and emissions reduction capacity requires sustainable investments in manufacturing and logistics processes over time, our model is dynamic. The planning horizon is divided into two stages, with the endogenously determined switching time between the two happening when a predefined capacity threshold is reached. We characterize the optimal decisions in both stages and provide a series of numerical illustrations varying the model's parameter values. Our main findings are as follows: (i) the price decreases when switching from the first to the second stage; (ii) emissions are above the industry standard during the first stage, while they are considerably below it in the second stage; (iii) the higher the capacity threshold for emissions reduction technologies, the larger the time it takes to reach it, which is costly in terms of reputation; (iv) although the consumers judge the manufacturer's environmental performance in relative terms with respect to the industry standard, we get that an increase in this standard has a small effect on the switching date. Finally, (v) emissions reduction capacity only has a short-term effect on the manufacturer's overall profit. © 2024 Elsevier Ltd

AB - We consider pricing and manufacturing and logistics investment decisions by a manufacturer facing environmentally concerned consumers. Demand depends on the price and manufacturer's environmental performance comparatively to the industry. As environmental reputation can only be built over time and emissions reduction capacity requires sustainable investments in manufacturing and logistics processes over time, our model is dynamic. The planning horizon is divided into two stages, with the endogenously determined switching time between the two happening when a predefined capacity threshold is reached. We characterize the optimal decisions in both stages and provide a series of numerical illustrations varying the model's parameter values. Our main findings are as follows: (i) the price decreases when switching from the first to the second stage; (ii) emissions are above the industry standard during the first stage, while they are considerably below it in the second stage; (iii) the higher the capacity threshold for emissions reduction technologies, the larger the time it takes to reach it, which is costly in terms of reputation; (iv) although the consumers judge the manufacturer's environmental performance in relative terms with respect to the industry standard, we get that an increase in this standard has a small effect on the switching date. Finally, (v) emissions reduction capacity only has a short-term effect on the manufacturer's overall profit. © 2024 Elsevier Ltd

KW - Consumers’ environmental concern.

KW - Environmental reputation

KW - Manufacturing and logistics investment

KW - Pricing decisions

UR - https://www.mendeley.com/catalogue/0aaa58cd-20a5-3a71-b9c5-c35eb9a3b017/

U2 - 10.1016/j.tre.2024.103468

DO - 10.1016/j.tre.2024.103468

M3 - статья

VL - 184

JO - Transportation Research Part E: Logistics and Transportation Review

JF - Transportation Research Part E: Logistics and Transportation Review

SN - 1366-5545

M1 - 103468

ER -