Effect and formulation of ecolabel policy: A perspective of green supply chain decision and coordination

Ecolabel policy has become an important strategy to encourage the consumption of green products throughout the world, contributing to sustainable development which is an inevitable choice for human society. Considering the manufacturer’s reputation, consumer’s environmental awareness, and effects of ecolabel certification on product demand, this study proposes several Stankelberg game models containing one manufacturer and one retailer to compare the optimal decisions and the impacts on the green supply chain with/without ecolabel certification, where four different scenarios are investigated in the centralized and decentralized situations. The results indicate that the ecolabel policy only functions below a threshold associated with the consumer’s environmental awareness, which is higher in the decentralized situation. On the contrary, the optimal ecolabel standard in the centralized decision-making situation is higher than that in the decentralized ones if maximizing the environmental benefit. For the manufacturer, only when producing products as the ecolabel standard can it get the optimal profit. Finally, a wholesale price contract with the manufacturer’s reputation is proposed, which improves the product’s green degree and the environmental benefit to the optimal level in a decentralized supply chain.