Journal Article


Managing financing risk in capacity investment under green supply chain competition

Abstract

In this paper, we study the asymmetric duopoly models of competing supply chains with financing uncertainty. The financing uncertainty of the green supply chain’s capacity investment could be available as complete or incomplete information to the traditional supply chain. By analyzing and comparing the optimal quantities, optimal prices, and optimal profits of both cases, we find that the financing uncertainty of capacity investment does not affect either chain’s choices of equilibrium quantities and prices in the complete information case. If this information is incomplete for the traditional supply chain, financing uncertainty plays an important role in determining optimal quantities and optimal prices, together with the lending interest rate. To encourage the use of environmentally friendly technologies, government should use per-unit subsidies if the green supply chain suffers the cost disadvantage, and should encourage financial institutions to provide preferential loans to the green supply chain that suffers manufacturing or retailing capacity restrictions.

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Authors

Wu, Tao
Zhang, Li-Guo
Ge, Teng

Oxford Brookes departments

Oxford Brookes Business School\Oxford Brookes Business School\Department of Accounting, Finance and Economics

Dates

Year of publication: 2019
Date of RADAR deposit: 2019-03-18


Creative Commons License This work is licensed under a Creative Commons Attribution-NonCommercial-NoDerivatives 4.0 International License


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