WHO LEADS THE WAY? BUYER VS. SUPPLIER INITIATIVES IN SUPPLY CHAIN CARBON FOOTPRINT REDUCTION

Date

2024-2-6

Author

Elif, Kuşçu

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

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We study two supply chain models: (i) Buyer-Led Supplier Development and (ii) Supplier-Led Supplier Development, which are consisting of a buyer and a supplier. We analyze which player should initiate the carbon footprint reduction efforts in the supply chain under a scope 3 emission tax by using different levers. The supplier, as the producer, may invest to reduce the product carbon footprint. The buyer, as the downstream partner, may incentivize the supplier through supplier development initiatives. In the buyer-led model, the buyer offers a wholesale price premium rate contingent on improvement, and the supplier decides her carbon footprint reduction efforts accordingly. In the supplier-led model, the supplier offers sharing the carbon footprint reduction investment cost and the buyer decides the improvement level. We compare these two models and gain insights into their effectiveness under varying market conditions. Our results show that carbon footprint reduction is guaranteed if the supplier takes the lead, however, a wider range of improvement opportunities occur when the buyer initiates the reduction effort.

Subject Keywords

Supplier development, Scope 3 emissions, Carbon footprint, Carbon regulations, Game theory

URI

https://hdl.handle.net/11511/108486

Collections

Graduate School of Natural and Applied Sciences, Thesis