Coordinating joint greening efforts in an agri-food supply chain with environmentally sensitive demand

Consumer demand for high-quality food and growing environmental awareness has led to an increasing preference for green agri-food. This study considers an agri-food supply chain consisting of a cooperative, an enterprise, and environmentally sensitive consumers. Consumer demand for green agri-food depends on products' sales price and greenness. Our study particularly considers that the greenness level is jointly determined by the greening efforts of both the cooperative and enterprise, where each party's effort cannot go below certain standards in accordance with the stipulations of relevant laws and regulations on green agri-food and the environment. We examine this supply chain by building a game model and explore the optimal decisions of all entities in a decentralized and centralized system. We design a cost-sharing contract and a buyback contract to coordinate the greening effort decisions and further investigated the impact of the green standards at different stages of the supply chain. The results show that increasing green standards can stimulate the supply chain to increase greening efforts and sales price, which increases costs and decreases product quantities, consequently decreasing the supply chain profits. The greening effort investment by one entity of the supply chain could be affected not only by its own standard, but also by the standard for the other entity. When green planting and processing standards are low, both the cooperative and the enterprise invest more greening efforts required by the standards. As the greenness level is jointly determined by the cooperative's and enterprise's greening efforts, we show that the green standards have a spillover effect if the greening effort of one stage in the supply chain is higher than the set standard while the other stage abides by its own standard. Further, under certain conditions, the cost-sharing and buyback contracts can fully coordinate the decentralized supply chain. (C) 2020 Elsevier Ltd. All rights reserved.