Balancing competition and sustainability: Strategic supply chain configurations in response to consumer low-carbon preferences

• A production optimization model is developed using a Stackelberg game framework. • The model incorporates consumer preferences for low-carbon products in competitive supply chain management. • Implementing a hybrid production structure reduces costs but leads to higher carbon emissions. • Retailers opt for a hybrid structure when consumer preference for low-carbon products is strong. • The optimal business model adapts in response to increasing low-carbon preferences. In the competitive landscape of supply chains, the strategic configuration of manufacturers and retailers has a significant impact on overall performance. This study analyzes three competitive structures in supply chain systems: centralized (CC), decentralized (DD), and hybrid (CD). This study optimizes retail prices and reduces carbon emissions by considering consumer preferences for low-carbon products. In the first supply chain, intense competition leads retailers to adopt a hybrid structure (CD), even when consumers prioritize low-carbon products. Manufacturers similarly opt for a hybrid model to balance production costs and carbon emissions. In the second supply chain, retailers prefer decentralization (DD) when consumer preference for low-carbon products is minimal. However, high consumer preference for low-carbon products results in the adoption of a hybrid structure to enhance overall production efficiency. As consumer low-carbon preferences increase, manufacturers shift from a centralized structure (CC) to a hybrid structure (CD) and eventually revert to a centralized structure. Our findings suggest that aligning supply chain structures with consumer preferences and competitive dynamics is crucial for achieving sustainable and profit-maximizing outcomes. The hybrid model is identified as a practical approach that balances economic efficiency with environmental sustainability.