Must Pollution Abatement Harm the Supplier in a Multi-Echelon Supply Chain?

Saglam, Ismail (2023): Must Pollution Abatement Harm the Supplier in a Multi-Echelon Supply Chain?

Abstract

This paper studies the welfare effects of the abatement cost burden of a supplier in a multi-echelon supply chain. We theoretically show that the profits of all echelons other than the supplier become lower when the supplier contributes more to the abatement. Also, we computationally show that the profit of the supplier may be higher when it makes a small amount of contribution to the abatement provided that the demand curve faced by the retailer is sufficiently linear.

• Item Type: MPRA Paper
• Language: English
• Keywords: Supply chain; multi-echelon; abatement cost.
• Subjects: D - Microeconomics > D4 - Market Structure, Pricing, and Design > D43 - Oligopoly and Other Forms of Market Imperfection; L - Industrial Organization > L1 - Market Structure, Firm Strategy, and Market Performance > L11 - Production, Pricing, and Market Structure ; Size Distribution of Firms; Q - Agricultural and Natural Resource Economics ; Environmental and Ecological Economics > Q5 - Environmental Economics > Q52 - Pollution Control Adoption and Costs ; Distributional Effects ; Employment Effects

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