Pricing policies for a competitive dual-channel supply chain with green investment and sales effort under revenue-sharing contract

In view of the mushroom development of web-based business and green production, a few organizations have moved to produce ecological friendly items and utilized the online channel to build up the competition. This paper deals with a two-echelon sustainable dual-channel supply chain containing two manufacturers and a single retailer. One manufacturer of the investigated supply chain produces a traditional non-green item, and another one releases a substitutable green item. The demand of both the item at the online and offline channel is a function of the sales price, greenness level, sales effort of the retailer. Furthermore, we have discussed the criteria for optimal pricing and greening strategy of supply chain members and the sales effort level of the retailer under a centralized and decentralized model. To enhance the supply chain performance, a revenue-sharing contract has been proposed, subject to the pareto improvement of each channel member. The numerical result demonstrates that the proposed revenue-sharing contract can enhance the manufacturer’s profit as well as system profit compared to the centralized and decentralized model and ensure higher profit for all the members than the decentralized model. Moreover, the item in the centralized model enjoys the highest green level than all other scenarios. Sensitivity analysis exhibits that a higher value of greening cost reduces the manufacturer’s green level, decreasing the sales price.