Effects of manufacturer fairness concerns and carbon emission reduction investment on pricing decisions under countervailing power

Government policies have focused on carbon emissions from the green supply chain (GSC). To discuss how price decision-making in GSC is affected by the manufacturer’s fairness concerns, retailer’s countervailing power, and carbon emissions reduction, the Stackelberg model assumes that consumers are environmentally sensitive. To explore this problem considering the type of manufacturer’s behavior preferences, we built four models that pertain to the following two situations: the retailer has countervailing power, and the retailer has no countervailing power. The results show that (1) the manufacturer’s disadvantageous fairness concerns reduce the overall supply chain profits and utility; influenced by countervailing power, the members witness a win-win situation; (2) moderate advantageous fairness concerns benefit GSC members; furthermore, under advantageous fairness concerns, the manufacturer can “give profits” to the retailer; (3) affected by the retailer’s countervailing power, no bargaining agreement is made in the GSC under advantageous fairness concerns. Finally, the interplay between member decisions and consumer sensitivity is explored. This study can help manufacturers achieve emission reduction targets in response to consumer environmental awareness and government regulation.