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Creating a low carbon economy through green supply chain management: investigation of willingness-to-pay for green products from a consumer’s perspective

Author

Listed:
  • Xia, Senmao
  • Ling, Yantao
  • de Main, Leanne
  • Lim, Ming K.
  • Li, Gendao
  • Zhang, Peter
  • Cao, Mengqiu
Abstract
This study investigates how consumers’ willingness-to-pay (WTP) for green products affects the decisions made by the green supply chain players. Through the application of game theory and uncertainty theory, our findings show that a higher consumer WTP for green products usually leads to a higher retail price and market share of green products, which motivates retailers and manufacturers to invest more in green technology. We also find that an increased WTP for green products can spur retailers to reduce the optimal green cost-sharing rate due to the pressure of increasing costs. In addition, we find that retailers are willing to lower the cost sharing rate when the confidence level increases. Regarding the contributions made by this study, it is one of the first to explore the transmission mechanisms involved in the management of the green supply chain by linking consumers’ WTP for green products to strategic decisions made by green supply chain players under conditions of uncertainty. Furthermore, our study could help green supply chain players to optimise the cost sharing mechanisms they use to generate more revenue, due to the increase in WTP for green products, which will in turn help to facilitate a low carbon economy.

Suggested Citation

  • Xia, Senmao & Ling, Yantao & de Main, Leanne & Lim, Ming K. & Li, Gendao & Zhang, Peter & Cao, Mengqiu, 2022. "Creating a low carbon economy through green supply chain management: investigation of willingness-to-pay for green products from a consumer’s perspective," LSE Research Online Documents on Economics 116895, London School of Economics and Political Science, LSE Library.
    • Handle: RePEc:ehl:lserod:116895
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    File URL: http://eprints.lse.ac.uk/116895/
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    References listed on IDEAS

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    Cited by:

    1. Yan, Ji & Xia, Senmao & Jiang, Amanda & Lin, Zhibin, 2024. "The effect of different types of virtual influencers on consumers’ emotional attachment," Journal of Business Research, Elsevier, vol. 177(C).

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    More about this item

    Keywords

    cost sharing; game theory; Green supply chain management; low carbon economy; uncertainty theory; willingness-to-pay;
    All these keywords.

    JEL classification:

    • Q50 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Environmental Economics - - - General
    • D10 - Microeconomics - - Household Behavior - - - General

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