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2140. Product Line Design under Sustainability Incentives
Invited abstract in session WA-24: Sustainable Supply Chain Management, stream Sustainable Supply Chains.
Wednesday, 8:30-10:00Room: 83 (building: 116)
Authors (first author is the speaker)
| 1. | Selçuk Karabatı
|
| College of Administrative Sciences and Economics, Koç University | |
| 2. | Burak Gokgur
|
| Operations Management and Information Systems, Sabancı University | |
| 3. | Gunes Biliciler
|
| College of Administrative Sciences and Economics, Koç University | |
| 4. | Asli Gurler Kandemir
|
| Sabancı University |
Abstract
We examine the product line design and pricing problems faced by a firm when the standard and green products exhibit markedly different environmental performances. We assume that consumer valuations of the green product are influenced in part by their level of 'environmental awareness.' The market comprises two segments with varying levels of awareness. We introduce a utility-based consumer choice model and validate it through experimentation. Initially, we study the firm's profit maximization problem, and then integrate it into the regulatory agency's incentive design problem. The regulatory agency aims to achieve a predetermined reduction in the realized use-phase environmental impact of products. Through computational analyses, we highlight the significant impact of segment sizes and their levels of environmental awareness on both the product design decisions of the firm and the incentive design mechanism of the regulatory agency.
Keywords
- Revenue Management and Pricing
- Sustainable Development
- OR in Sustainability
Status: accepted
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