Pricing Strategy for Green Products Based on Disparities in Energy Consumption

The energy consumption disparity is an important factor affecting product pricing. The risk and the cost of new energy products are generally higher than those of traditional energy products, which results in conflicting pricing strategies between manufacturers and retailers. Applying the concepts from dynamic cooperative game theory, such as improved Shapley value, in this paper, we have studied the optimal pricing strategies of manufacturers and retailers in a cooperative and a noncooperative game. Based on policies and market conditions in China, we have used a logistic regression model to determine the impact of product sales, devised pricing strategies affected by the relevant government tax, and subsidy policy. The results show that, first, under the basic condition in which the manufacturer obtains profit, the optimal pricing of the retailer in a noncooperative game is more than that in a cooperative game. Second, the differential coefficient of the energy consumption of the two products in the cooperative game is greater than that in the noncooperative game. Third, the cooperative game not only plays an incentivizing role for retailers in setting reasonable prices of new energy products but also encourages manufacturers, producing a greater difference of energy consumption between traditional energy products and new energy products, which further reduces the consumption of new energy products. Finally, the strategies of sharing the green marketing costs by manufacturers and retailers can improve the total profits of the supply chain in addition to their own.