Coordinating a dual-channel supply chain with price discount contracts under carbon emission capacity regulation

This paper considers the coordination of a dual-channel supply chain under mandatory carbon emission capacity regulation. Market demand is affected by the selling prices in both online and offline channels, and consumers are either brand loyal or retailer loyal. By analyzing the optimal pricing decisions and profits in centralized and decentralized systems, we find that when the carbon emission capacity assigned to a retailer is adequate, the carbon emission constraint placed on the suppliers emissions has a negative effect on the retailers profit. When the carbon emission capacity assigned to a retailer is fully used, a fully used carbon emission capacity for the supplier can decrease the suppliers profit without affecting the retailers profit. To improve the performance of the decentralized system, we propose online channel price discount and offline channel price discount contracts to coordinate the supply chain and provide the conditions under which price discount contracts can coordinate the dual-channel supply chain. Numerical examples are divided into two parts. The first part illustrates the effects of carbon emission capacity and customer loyalty parameters on the decisions of the dual-channel supply chain. The second part demonstrates the approach to find the interval of the price discount coefficient and identifies the coordination effects between two price discount contracts. Some valuable decision suggestions are provided. (C) 2017 Elsevier Inc. All rights reserved.