INFORMS ANNUAL MEETING 2017, Texas, United States Of America, 22 - 25 October 2017
We study a buyer’s strategies to incentivize
environmental quality investment in a three-tier supply chain. Environmental
quality of the end product depends on the environmental performances of both
the tier 1 and the tier 2 supplier. A higher environmental quality produces an
increased demand for the end product; and hence for the whole supply chain. In
this setting, we compare the effectiveness of delegation vs. full control
strategies from the buyer’s cost-sharing perspective.