Strategic role of charitable donation in supply chain coordination with consumer prosocial preference

Enterprises commonly make charitable donations to attract customers to purchase their prod-ucts. We explore the supply chain coordination problem with charitable donation via aStackelberg game, wherein the e-commerce platform is the leader and the manufacturer isthe follower. The former sells the products and decides the commission, whereas the latterdetermines the charitable donation investment and price. We investigate the charitable donationand pricing strategies in a centralized and decentralized system, and obtain the followinginsights. (1) The donation and pricing strategies hinges on the proportion of prosocial customersand the donation cost coefficient. (2) Donation can increase the product price and thesupply chain performance, unlike non-donation. (3) In the decentralized system with extremelyprofitable market conditions, charitable donation will aggravate the competition in the supplychain, which benefits the e-commerce platform but hurts the manufacturer. Nonetheless, undercertain conditions, the coordination of supply chain can be automatically realized. (4) A simpletwo-part tariff contract can perfectly coordinate the supply chain