Optimal channel structure for a green supply chain with consumer green-awareness demand

This paper examines the optimal channel structure of a green supply chain consisting of one manufacturer and one retailer. The manufacturer, who is the Stackelberg leader, is responsible for green technology costs. Consumers prefer green products and therefore are green aware. We study four channel structures: a manufacturer’s dual-channel supply chain, a retailer’s dual-channel supply chain, a manufacturer-online and retailer-offline (hybrid I) structure, and a manufacturer-offline and retailer-online (hybrid II) structure. For each structure, we analytically investigate the impact of consumers’ green awareness and proportion of online and offline consumers on the level of green technology, profits, and retail prices. We also examine the effect on the optimal solutions of the manufacturer and retailer when they share the green cost. The results show that the manufacturer’s dual-channel supply chain performs the best in improving the greenness of products and its own profits. Concerning hybrid dual-channel supply chains, the manufacturer will always choose the channel with the majority of consumers to directly sell products through. The retailer, in most cases, also prefers to operate two channels simultaneously. In addition, regardless of the type of channel structure involved, consumers’ green awareness encourages the manufacturer to improve the greenness of its products; however, the proportion of online consumers has a positive effect on the greenness of products in the retailer-offline and manufacturer-online cases but a negative effect in the retailer-online and manufacturer-offline cases.