Differential Strategies of Continuous Agri-Product Supply Chain Considering Consumer Perception of Eco-Quality

Abstract

Considering the influence of the consumers’ perception of eco-quality (CPQ) on the dynamic strategies of the continuous agri-product supply chain, the paper examines a two-stage agri-product supply chain composed of a supplier and a retailer, where the supplier invests in eco-quality improvement and the retailer invests in advertising. Taking the CPQ, eco-quality and goodwill as ternary state variables, the paper formulates joint decision-making models of a continuous agri-product supply chain based on differential game theory. The paper has analyzed equilibrium strategies in decentralized and centralized scenarios, respectively, and further developed an advertising–eco-quality investment cost-sharing contract to coordinate the supply chain. Finally, comparative and numerical analyses have been conducted. The analyses results reveal that consumers’ perceptions of eco-quality and their goodwill preference towards an agri-product encourage the supplier and retailer to improve the eco-quality of the agri-product and the level of advertising. Indeed, the greater the impact of goodwill on demand, the higher level of the supplier’s eco-quality investment and the retailer’s advertising effort, and the higher the profits of the supply chain. The paper also finds that the proposed cost-sharing contract can achieve a Pareto improvement in the continuous agri-product supply chain system. Furthermore, the higher the consumer goodwill preference, the more motivated suppliers and retailers are to cooperate.

Keywords

• continuous agri-product
• consumer perception
• eco-quality
• differential game
• cost-sharing contract