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doi: 10.3934/jimo.2021139
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## Coordination strategy for a dual-channel electricity supply chain with sustainability

 a. College of Management Science, Chengdu University of Technology, Chengdu 610059, China b. School of Management and Economics, University of Electronic Science and Technology of China, Chengdu 611731, China c. National Research Base of Intelligent Manufacturing Service, Chongqing, Technology and Business University, Chongqing 400067, China d. College of Economics and Management, China Three Gorges University, Yichang 443002, China

* Corresponding author: Fuying Jing

Received  March 2021 Revised  April 2021 Early access August 2021

This paper describes the construction of a dual-channel electricity supply chain, with an electricity generation enterprise as the leader and an electricity retail enterprise as the follower, examining sustainability and price decision-making, and formulates a coordination contract to improve electricity supply chain performance. The main results are as follows. Firstly, sensitivity to electricity sustainability contributes to increased electricity sustainability, electricity price, electricity demand, and supply chain enterprises' profits. Secondly, a centralized model is conducive to investment in more sustainable energy production. Finally, electricity supply chain system coordination can be realized by combining revenue-sharing and cost-sharing in a fixed compensation contract.

Citation: Wei Chen, Fuying Jing, Li Zhong. Coordination strategy for a dual-channel electricity supply chain with sustainability. Journal of Industrial and Management Optimization, doi: 10.3934/jimo.2021139
##### References:
 [1] N. Alizadeh-Basban and A. A. Taleizadeh, A hybrid circular economy - game theoretical approach in a dual-channel green supply chain considering sale's effort, delivery time, and hybrid remanufacturing, Journal of Cleaner Production, 250 (2020), 119521. doi: 10.1016/j.jclepro.2019.119521. [2] A. Aslani and J. Heydari, Transshipment contract for coordination of a green dual-channel supply chain under channel disruption, Journal of Cleaner Production, 223 (2019), 596-609.  doi: 10.1016/j.jclepro.2019.03.186. [3] L. Feng, K. Govindan and C. Li, Strategic planning: Design and coordination for dual-recycling channel reverse supply chain considering consumer behavior, European Journal of Operational Research, 260 (2017), 601-612.  doi: 10.1016/j.ejor.2016.12.050. [4] J. Gao, Z. Xiao and H. Wei, Competition and coordination in a dual-channel green supply chain with an eco-label policy, Computers & Industrial Engineering, 153 (2021), 107057. doi: 10.1016/j.cie.2020.107057. [5] D. Ghosh and J. Shah, A comparative analysis of greening policies across supply chain structures, International Journal of Production Economics, 135 (2012), 568-583.  doi: 10.1016/j.ijpe.2011.05.027. [6] J. Ji, Z. Zhang and L. Yang, Carbon emission reduction decisions in the retail-/dual-channel supply chain with consumers' preference, Journal of Cleaner Production, 141 (2017), 852-867.  doi: 10.1016/j.jclepro.2016.09.135. [7] M. Khouja, S. Park and G. G. Cai, Channel selection and pricing in the presence of retail-captive consumers, International Journal of Production Economics, 125 (2010), 84-95.  doi: 10.1016/j.ijpe.2010.01.005. [8] K. H. Lee, Strategy equilibrium in Stackelberg model with transmission congestion in electricity market, Journal of Electrical Engineering & Technology, 9 (2014), 90-97.  doi: 10.5370/JEET.2014.9.1.090. [9] B. Li, P.-W. Hou, P. Chen and Q.-H. Li, Pricing strategy and coordination in a dual channel supply chain with a risk-averse retailer, International Journal of Production Economics, 178 (2016), 154-168.  doi: 10.1016/j.ijpe.2016.05.010. [10] B. Li, M. Zhu, Y. Jiang and Z. Li, Pricing policies of a competitive dual-channel green supply chain, Journal of Cleaner Production, 112 (2016), 2029-2042.  doi: 10.1016/j.jclepro.2015.05.017. [11] Z. Liu, T. D. Anderson and J. M. Cruz, Consumer environmental awareness and competition in two-stage supply chains, European Journal of Operational Research, 218 (2012), 602-613.  doi: 10.1016/j.ejor.2011.11.027. [12] Q. Meng, M. Li, W. Liu, Z. Li and J. Zhang, Pricing policies of dual-channel green supply chain: Considering government subsidies and consumers' dual preferences, Sustainable Production and Consumption, 26 (2021), 1021-1030.  doi: 10.1016/j.spc.2021.01.012. [13] X. Qian, F. T. S. Chan, J. Zhang, M. Yin and Q. Zhang, Channel coordination of a two-echelon sustainable supply chain with a fair-minded retailer under cap-and-trade regulation, Journal of Cleaner Production, 240 (2020), 118715. doi: 10.1016/j.jclepro.2019.118715. [14] K. Rahmani and M. Yavari, Pricing policies for a dual-channel green supply chain under demand disruptions, Computers & Industrial Engineering, 127 (2019), 493-510.  doi: 10.1016/j.cie.2018.10.039. [15] A. Ranjan and J. K. Jha, Pricing and coordination strategies of a dual-channel supply chain considering green quality and sales effort, Journal of Cleaner Production, 218 (2019), 409-424.  doi: 10.1016/j.jclepro.2019.01.297. [16] M. Roozbehani, M. Dahleh and S. Mitter, Dynamic pricing and stabilization of supply and Demand in modern electric power grids, 2010 First IEEE International Conference on Smart Grid Communications, (2010). doi: 10.1109/SMARTGRID.2010.5621994. [17] Q. Wang, D. Zhao and L. He, Contracting emission reduction for supply chains considering market low-carbon preference, Journal of Cleaner Production, 120 (2016), 72-84.  doi: 10.1016/j.jclepro.2015.11.049. [18] J. Xie, W. Zhang, L. Liang, Y. Xia, J. Yin and G. Yang, The revenue and cost-sharing contract of pricing and servicing policies in a dual-channel closed-loop supply chain, Journal of Cleaner Production, 191 (2018), 361-383.  doi: 10.1016/j.jclepro.2018.04.223. [19] X. Xu, P. He, H. Xu and Q. Zhang, Supply chain coordination with green technology under cap-and-trade regulation, International Journal of Production Economics, 183 (2017), 433-442.  doi: 10.1016/j.ijpe.2016.08.029. [20] D. Yang, T. Xiao and J. Huang, Dual-channel structure choice of an environmental responsibility supply chain with green investment, Journal of Cleaner Production, 210 (2019), 134-145.  doi: 10.1016/j.jclepro.2018.11.014. [21] L. Yang, Q. Zhang and J. Ji, Pricing and carbon emission reduction decisions in supply chains with vertical and horizontal cooperation, International Journal of Production Economics, 191 (2017), 286-297.  doi: 10.1016/j.ijpe.2017.06.021. [22] Z. Zhang, S. Liu and B. Niu, Coordination mechanism of dual-channel closed-loop supply chains considering product quality and return, Journal of Cleaner Production, 248 (2020), 119273. [23] Y. Zhang and B. Hezarkhani, Competition in dual-channel supply chains: The manufacturers' channel selection, European Journal of Operational Research, 1 (2021), 244-262.  doi: 10.1016/j.ejor.2020.09.031. [24] B. Zheng, J. Chu and L. Jin, Recycling channel selection and coordination in dual sales channel closed-loop supply chains, Applied Mathematical Modelling, 95 (2021), 484-502.  doi: 10.1016/j.apm.2021.02.022.

show all references

##### References:
 [1] N. Alizadeh-Basban and A. A. Taleizadeh, A hybrid circular economy - game theoretical approach in a dual-channel green supply chain considering sale's effort, delivery time, and hybrid remanufacturing, Journal of Cleaner Production, 250 (2020), 119521. doi: 10.1016/j.jclepro.2019.119521. [2] A. Aslani and J. Heydari, Transshipment contract for coordination of a green dual-channel supply chain under channel disruption, Journal of Cleaner Production, 223 (2019), 596-609.  doi: 10.1016/j.jclepro.2019.03.186. [3] L. Feng, K. Govindan and C. Li, Strategic planning: Design and coordination for dual-recycling channel reverse supply chain considering consumer behavior, European Journal of Operational Research, 260 (2017), 601-612.  doi: 10.1016/j.ejor.2016.12.050. [4] J. Gao, Z. Xiao and H. Wei, Competition and coordination in a dual-channel green supply chain with an eco-label policy, Computers & Industrial Engineering, 153 (2021), 107057. doi: 10.1016/j.cie.2020.107057. [5] D. Ghosh and J. Shah, A comparative analysis of greening policies across supply chain structures, International Journal of Production Economics, 135 (2012), 568-583.  doi: 10.1016/j.ijpe.2011.05.027. [6] J. Ji, Z. Zhang and L. Yang, Carbon emission reduction decisions in the retail-/dual-channel supply chain with consumers' preference, Journal of Cleaner Production, 141 (2017), 852-867.  doi: 10.1016/j.jclepro.2016.09.135. [7] M. Khouja, S. Park and G. G. Cai, Channel selection and pricing in the presence of retail-captive consumers, International Journal of Production Economics, 125 (2010), 84-95.  doi: 10.1016/j.ijpe.2010.01.005. [8] K. H. Lee, Strategy equilibrium in Stackelberg model with transmission congestion in electricity market, Journal of Electrical Engineering & Technology, 9 (2014), 90-97.  doi: 10.5370/JEET.2014.9.1.090. [9] B. Li, P.-W. Hou, P. Chen and Q.-H. Li, Pricing strategy and coordination in a dual channel supply chain with a risk-averse retailer, International Journal of Production Economics, 178 (2016), 154-168.  doi: 10.1016/j.ijpe.2016.05.010. [10] B. Li, M. Zhu, Y. Jiang and Z. Li, Pricing policies of a competitive dual-channel green supply chain, Journal of Cleaner Production, 112 (2016), 2029-2042.  doi: 10.1016/j.jclepro.2015.05.017. [11] Z. Liu, T. D. Anderson and J. M. Cruz, Consumer environmental awareness and competition in two-stage supply chains, European Journal of Operational Research, 218 (2012), 602-613.  doi: 10.1016/j.ejor.2011.11.027. [12] Q. Meng, M. Li, W. Liu, Z. Li and J. Zhang, Pricing policies of dual-channel green supply chain: Considering government subsidies and consumers' dual preferences, Sustainable Production and Consumption, 26 (2021), 1021-1030.  doi: 10.1016/j.spc.2021.01.012. [13] X. Qian, F. T. S. Chan, J. Zhang, M. Yin and Q. Zhang, Channel coordination of a two-echelon sustainable supply chain with a fair-minded retailer under cap-and-trade regulation, Journal of Cleaner Production, 240 (2020), 118715. doi: 10.1016/j.jclepro.2019.118715. [14] K. Rahmani and M. Yavari, Pricing policies for a dual-channel green supply chain under demand disruptions, Computers & Industrial Engineering, 127 (2019), 493-510.  doi: 10.1016/j.cie.2018.10.039. [15] A. Ranjan and J. K. Jha, Pricing and coordination strategies of a dual-channel supply chain considering green quality and sales effort, Journal of Cleaner Production, 218 (2019), 409-424.  doi: 10.1016/j.jclepro.2019.01.297. [16] M. Roozbehani, M. Dahleh and S. Mitter, Dynamic pricing and stabilization of supply and Demand in modern electric power grids, 2010 First IEEE International Conference on Smart Grid Communications, (2010). doi: 10.1109/SMARTGRID.2010.5621994. [17] Q. Wang, D. Zhao and L. He, Contracting emission reduction for supply chains considering market low-carbon preference, Journal of Cleaner Production, 120 (2016), 72-84.  doi: 10.1016/j.jclepro.2015.11.049. [18] J. Xie, W. Zhang, L. Liang, Y. Xia, J. Yin and G. Yang, The revenue and cost-sharing contract of pricing and servicing policies in a dual-channel closed-loop supply chain, Journal of Cleaner Production, 191 (2018), 361-383.  doi: 10.1016/j.jclepro.2018.04.223. [19] X. Xu, P. He, H. Xu and Q. Zhang, Supply chain coordination with green technology under cap-and-trade regulation, International Journal of Production Economics, 183 (2017), 433-442.  doi: 10.1016/j.ijpe.2016.08.029. [20] D. Yang, T. Xiao and J. Huang, Dual-channel structure choice of an environmental responsibility supply chain with green investment, Journal of Cleaner Production, 210 (2019), 134-145.  doi: 10.1016/j.jclepro.2018.11.014. [21] L. Yang, Q. Zhang and J. Ji, Pricing and carbon emission reduction decisions in supply chains with vertical and horizontal cooperation, International Journal of Production Economics, 191 (2017), 286-297.  doi: 10.1016/j.ijpe.2017.06.021. [22] Z. Zhang, S. Liu and B. Niu, Coordination mechanism of dual-channel closed-loop supply chains considering product quality and return, Journal of Cleaner Production, 248 (2020), 119273. [23] Y. Zhang and B. Hezarkhani, Competition in dual-channel supply chains: The manufacturers' channel selection, European Journal of Operational Research, 1 (2021), 244-262.  doi: 10.1016/j.ejor.2020.09.031. [24] B. Zheng, J. Chu and L. Jin, Recycling channel selection and coordination in dual sales channel closed-loop supply chains, Applied Mathematical Modelling, 95 (2021), 484-502.  doi: 10.1016/j.apm.2021.02.022.
Profit $\pi$ as $b$
Profit $\pi$ as $c$
Profit $\pi$ as $g$
Profit $\pi$ as $f$
 Notation Definition $q_m$ Electricity demand of electricity generation enterprise $q_r$ Electricity demand of electricity retail enterprise $a$ Potential market demand $b$ Price competition between the two channels $f$ Sensitivity to electricity sustainability $c$ Electricity production cost coefficient $g$ Cost coefficient of electricity sustainability $\pi_m$ Profit of the electricity generation enterprise $\pi_r$ Profit of the electricity retail enterprise Decision Variables $p_m$ Electricity price of electricity generation enterprise $p_r$ Electricity price of electricity retail enterprise $w_r$ Electricity wholesale price for electricity retail enterprise $e$ Degree of sustainability of electricity
 Notation Definition $q_m$ Electricity demand of electricity generation enterprise $q_r$ Electricity demand of electricity retail enterprise $a$ Potential market demand $b$ Price competition between the two channels $f$ Sensitivity to electricity sustainability $c$ Electricity production cost coefficient $g$ Cost coefficient of electricity sustainability $\pi_m$ Profit of the electricity generation enterprise $\pi_r$ Profit of the electricity retail enterprise Decision Variables $p_m$ Electricity price of electricity generation enterprise $p_r$ Electricity price of electricity retail enterprise $w_r$ Electricity wholesale price for electricity retail enterprise $e$ Degree of sustainability of electricity
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