A new coopetitive mode in a sustainable supply chain: Energy performance contracting and supplier encroachment

Energy performance contracting (EPC) is considered to promote the cooperation of low -carbon investment between supply chain members; however, few studies have examined the impact of supplier encroachment on EPC cooperation. This study investigated a new coopetitive mode in a sustainable supply chain with EPC and supplier encroachment. The supplier may provide an EPC service to curb carbon emissions for the downstream manufacturer and obtain a partial savings in carbon costs by bearing the entire cost of the EPC investment. However, the supplier is motivated to develop a new direct selling channel that engages in Cournot competition with the manufacturer in the final market. The consumer acceptance of a new encroaching channel and the unit incompatibility cost of EPC are two critical factors in supplier and manufacturer decisions. The results demonstrate that the lower the consumer acceptance of a new encroaching channel, the more radical the decision that will be made by the supplier to abate emissions after encroachment to reduce the manufacturer ' s emissions cost. Moreover, in contrast to the traditional result, encroachment might cause the supplier to charge a higher wholesale price when implementing EPC services. Furthermore, there exist win -win situation in the EPC scenario and lose -lose situation in which the two supply chain members are worse off whether the supplier provides either encroachment or EPC services.