Pricing and green investment strategies for electric vehicle supply chain in a competitive market under different channel leadership

Abstract

To reduce carbon emissions and enable sustainable development goals, electric vehicles need to be promoted. As an evolving area of study, significant research gaps exist in the electric vehicle supply chain literature, especially in terms of competition, game structures, decision variables, green investment, etc. This paper considers two competing electric vehicle supply chains with one manufacturer and one retailer under each supply chain. The supply chain members are profit-maximizing in nature. Here, the manufacturers decide on the wholesale price and green level of the product, whereas the retailers or distributors decide on the retail selling price. The market demand is price-sensitive and also positively related to consumers’ green awareness and brand reputation of green products. Nevertheless, the green level comes with a price in the form of green investment for the manufacturer. Therefore, the manufacturer makes a tradeoff between the increased revenue due to greener electric vehicle technologies and the associated green investments. This paper derived the optimal decisions for the supply chain following three game-theoretical approaches. Three game scenarios represent the dynamic power structures of the market. The overall results are presented via four propositions and twelve corollaries, along with proofs. Furthermore, numerical simulations have been conducted to gain further insights into the sensitivities of the optimal actions with respect to self-price, competitor price, green level, and green investment. The overall study may assist electric vehicle businesses in having a better understanding of optimal pricing and green investment strategies under a variety of market scenarios.