Channel Power Structures and Environmental Efforts: Insights from Store and National Brand Interactions

This paper examined the influence of consumer environmental awareness (CEA) under pricing and environmental effort competition between store brands (SB) and national brands (NB) products in a two-stage supply chain that includes a manufacturer and a retailer. We developed a mathematical model to evaluate the dynamic relationship between the manufacturer and the retailer, utilizing three power structures (Manufacturer-Stackelberg (MS), Retailer-Stackelberg (RS), and Vertical Nash (VN)) under two cases: environmental investment in NB products only, and environmental investment in two products. Our findings suggest that: 1) CEA has a favorable effect on the profits of the manufacturer and the retailer when only NB products are environmentally invested in; 2) Both CEA and product substitutability have a direct impact on the best channel power structure; 3) The high substitutability of products encourages the retailer to set a high retail price for products; and 4) RS channel power structure ensures that the retailer is always profitable.