Optimal pricing strategies of green innovative products in a dual-channel supply chain

Due to the significant increase in internet usage, customers are increasingly favoring the online market. As a result, manufacturers are drawn to establishing an online channel that includes retail channel options. In recent years, the emphasis on environmental awareness and government regulations regarding the environment have motivated manufacturers to introduce and produce eco-friendly products while maintaining their economic viability. This article presents a dual-channel supply chain management model involving a manufacturer and a retailer. Under a Centralized policy, the article determines the optimal online prices, retail prices, wholesale prices, and level of green improvements. The optimal results are obtained and compared using a numerical example. Additionally, a sensitivity analysis is conducted to examine the impact of various significant parameters. It is found that the own-channel price sensitivity parameter negatively impacts supply chain profit and members’ earnings, while increasing cost coefficients of green innovation rapidly decrease optimal levels and maximum profit, as demonstrated by a hypothetical data set simulation.