Regional Sustainability ›› 2022, Vol. 3 ›› Issue (4): 319-334.doi: 10.1016/j.regsus.2022.11.003

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Optimal decision-making considering inter-supply-chain competition and negative-spillover from environmental effort

WANG Jiguanga,*(), HU Yushanga, WU Yucaib,*()   

  1. aSchool of Economics and Management, Shanxi University, Taiyuan, 030006, China
    bSchool of Business Administration, Shanxi University of Finance and Economics, Taiyuan, 030006, China
  • Received:2022-08-20 Revised:2022-10-28 Accepted:2022-11-29 Online:2022-12-30 Published:2023-01-31
  • Contact: WANG Jiguang,WU Yucai;


Focusing on negative-spillover from environmental effort, this paper explores the issues of competition and optimal decision-making based on two competing two-stage manufacturer-dominated supply chains: centralized and decentralized. We develop the Stackelberg competition models according to four identified competition scenarios (pure centralized structure-CC, mixed structure-DC, mixed structure-CD, and pure decentralized structure-DD). By comparing the results of the four scenarios, we find that negative-spillover from environmental effort negatively impacts environmental-effort providers and reduces the optimal profit of the manufacturer who provide the environmental effort, which in turn reduces the profit of the entire supply chain. The inter-supply-chain competition also produces a negative incentive for environmental-effort providers but provides a free riding effect on the non-provider, and this effect increases as competition increases. In terms of network externality, the structural change of a supply chain from centralized to decentralized is altruistic, which generates a double-marginalization (i.e., the network externality enhances competitor performance). Furthermore, the leader supply chain with a centralized structure is more willing to provide greater environmental effort, whereas when the leader supply chain structure remains unchanged, its environmental effort depends on the negative-spillover effect and the follower supply chain structure. Therefore, excessive supply chain competition should be avoided, and the negative-spillover effect of environmental effort should be reduced to motivate environmental-effort providers to increase their environmental efforts and promote the development of sustainable green supply chains. Future research should examine retailer-dominated supply chain competition and compare the results with the conclusions of this study.

Key words: Supply chain management, Environmental effort Negative-spillover effect, Inter-supply-chain competition, Manufacturer-dominated supply chain, Centralized, Decentralized, Stackelberg game