Should a Retailer Introduce Green Items in Socially Responsible Supply Chains? A Game-Theoretic Analysis

Abstract

Given the increasing societal emphasis on corporate social responsibility (CSR), a critical strategic decision facing retailers is whether to introduce green products when distributing the manufacturer's nongreen ones. To address this issue, this article mainly considers two scenarios: the regular or green-supportive manufacturer. Furthermore, we develop four mathematical models to determine the retailer's green item introduction decisions. The research findings indicate that the manufacturer's CSR would significantly impact both firms’ pricing decisions and may change market distribution. Additionally, the retailer introducing green items will reduce the wholesale/retail prices of nongreen items but may foster an augmentation in overall demand. It is noteworthy that the retailer introducing green items does not necessarily cannibalize the sales of nongreen items; instead, it may even enhance their sales. Significantly, this strategy can benefit the green-supportive manufacturer if the greening cost is relatively low. These implications underscore that incentivizing manufacturers to care more about environmentally conscious consumers can serve as a viable strategy for promoting sustainable development initiatives.