Green degree decision and pricing strategy of dual-channel supply chains

With the prevalence of green supply chains, the government has basic requirements for companies’ green investments and outcomes while consumers increasingly favor green products. Thus, green degree decision has garnered significant attention from manufacturers. This paper incorporates green degree decisions into a dual-channel supply chain and adopts a Stackelberg model to analyze the green degree and pricing strategies under centralized and decentralized decisions. We find that, when the manufacturer only decides on price, dual-channel choice is always the optimal strategy under centralized decision-making; however, under decentralized decision-making, the dual-channel choice will be chosen only when the wholesale price is low. Considering green degree decision, both direct and indirect channel prices increase with the green degree, and the indirect channel price is more sensitive to changes in the green degree under centralized decision-making; and higher green degrees are always advantageous for the retailer, but the manufacturer’s profit initially decreases and then increases as the green degree rises under decentralized decision-making. Moreover, the wholesale price is used as a strategic tool for the manufacturer to control the distribution channel, particularly when the green degree is not introduced, the manufacturer can always ensure the introduction of dual channels. Besides, higher consumers’ environmental awareness is always beneficial to channel members, as it promotes channel prices and green degree. This study provides strategic insights for optimizing pricing and green degree decisions in dual-channel supply chains to achieve better economic and environmental outcomes.