The emission reduction cooperation in a supply chain with corporate social responsibility

This paper considers a supply chain with a manufacturer (M) and two retailers (R1 and R2). To investigate the effects of R1's corporate social responsibility (CSR) level on emission reduction cooperation, four cooperation modes are discussed. The results show that R1 can use CSR as a strategic tool to obtain competitive advantages, strengthen his cooperation with M and prevent cooperation of M and R2 under certain conditions. The increase of R1's CSR level enhances the emission reduction level and consumer surplus, while its impact on channel members' profits depends on the emission reduction cost. A side-payment contract is proposed to motivate channel members to participate in cooperation. Under this contract, the profit improvement rate for the manufacturer initially reduces and then enhances as R1's CSR level increases. Moreover, the research is extended to the case that the retailers' products are imperfect substitutes and thus indicates that channel members' mode preferences are affected not only by product homogeneity but also by R1's CSR level.