Characteristics of the Green Supply Chain Coordination: Theoretical Contribution to Use the Wholesale Pricing Contract in the Green Supply Chain

Because of the eco-consciousness and the environmental protection companies become ’green’, therefore many green supply chains are realized in the business sphere. Companies of green supply chain take care on the environmental protection. These companies try to decrease the pollution, so they implement some eco-conscious processes. The green supply chains contain these companies. The biggest problem is the coordination of these chains. Nowadays, supply chains have many members, so the cooperation is getting more and more difficult. It could be a potential good solution, if the chain members use the different contract types to coordinate the chain. Contract tries to handle the inequality between the chain members and gives a framework to the cooperation of chain members. This paper introduces the wholesale pricing contract, which can be used in the case of green supply chain and its different settings effectively. The wholesale pricing contract is one of the traditional contract types but it produces different performance in the case of centralized and decentralized setting. Centralized setting has a chain leader – this member operates and coordinates the whole chain and defines common goals for the members. In decentralized setting the members define their own goals and they act in accordance with their own interest. A simulation with numerical example is also included to represent the difference between the two settings.

JEL classification: D21, L11, L14, M10.