Journal of Retailing and Consumer Services 55 (2020) 102118

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Journal of Retailing and Consumer Services

journal homepage: http://www.elsevier.com/locate/jretconser

Price competition between green and non green products under corporate
social responsible firm
Shib Sankar Sana
Kishore Bharati Bhagini Nivedita College, Ramkrishna Sarani, Behala, Kolkata, 700060, India

A R T I C L E I N F O A B S T R A C T

Keywords: This article deals with a newsvendor inventory model in light of green product marketing of corporate social
Price sensitive responsible firms. In this model, comparison between green and non green marketing is analyzed including
Corporate social responsibility subsidy and tax implementation by Government where the Government offers higher subsidy and lower tax to
Carbon emission
the green producer unlike the lower subsidy and higher tax to the non green producer. There is also price contest
Tax & tariff
Subsidy
between green and non green producer as the demands of the products are dependent on sales price, carbon
emission and corporate social responsibility index. Assuming the cost and profit parameters, an expected profit
function of the systems is formulated and maximized analytically. Finally, numerical examples are illustrated to
justify the proposed model.

1. Introduction
In 21st century, Environmental Issue (EI) is most important concern
to sustain human civilization. Due to increasing population, non-
renewable resources are decreasing and non-biodegradable waste
products are increasing which have awful affect on the environment as
well as resources of the world. For instance, more use of fossil fuels,
plastic and polluted grounds water, air and soil pollution which cause
engender green house gas (GHG) emission and ground water crisis of the
earth. In the context of sustainable environment, environmental scien­
tists and responsible government organization (GO) are trying to keep
up sustainable growth of human civilization regarding uses of industrial
products. As GO is highest and strongest legal authority of a country, it
implements policies and Acts to protect the environment from harmful
effects of the pollutants. The awareness programmes and advertising of
the side affect of human activities on the environment and incentive
similar to subsidies and awards which boost up green products are the
motivational method of the policies. These Acts consider punishment
mechanisms consisting of preventive techniques like taxes & tariffs that
control and confine the pollutants generated from human activities.
Now-a-days, a growing number of industrialists are being motivated
to produce green products using green technologies because of low GHG
emission in production and it uses disposal, recyclability, biodegradable,
etc. The awareness programmes by GO and non government organiza­
tions (NGO) about hazardous contents of a product may motivate the
consumers to buy green products more. Consequently, the firms are
urged to manufacture these goods which are biodegradable to meet the
green consumers’ demand. There are several international firms which
have produced green products to set of scales the firm’s revenues with its
corporate social responsibility (CSR) to trim down the environmental
pollution. For example, Toyota manufactures Prius which provides
enviable benefits to the consumers and the environment. Prius is a
hybrid car having emission dipping gasoline that decreases the
discharge of carbon dioxide and nitrogen dioxide to the environment. It
also saves cost of fuel which is a positive factor for many consumers.
PepsiCo and Coca-Cola use recyclable PET plastic as container of soft
drink, a substitute of corrugated materials which decrease pollution and
pricing of green products.
Pricing of green products is a major topic at the firms. The man­
agements of the firms face the topic of pricing their goods with proper
selection of factors related to procurement and marketing of the prod­
ucts. Consumer environment awareness (CEA) makes easy the green
product (GP) consumptions that should be considered in pricing of green
products. Generally, environment conscious customers are agreeable to
shell out a premium for GP. The prices of the green products are
apparently higher than non green (regular) products (NGP). In this sit­
uation, the firms have to implement CSR owing to increase the business
growth. The CRS may include scholarships for education of distress and
meritorious students, health camp at free of cost, financial help for small
industries (self help group) of the society, etc. The CSR firms must ensure
that green marketing activities are integrated holistically, otherwise
negative consequences are looked forward. If the GO provides subsidy

E-mail address: shib_sankar@yahoo.com.

https://doi.org/10.1016/j.jretconser.2020.102118
Received 4 February 2020; Received in revised form 7 March 2020; Accepted 23 March 2020
Available online 30 April 2020
0969-6989/© 2020 Elsevier Ltd. All rights reserved.
S.S. Sana
and reduces tax & tariffs for GP unlike NGP, the firms possibly will
reduce the price of GP which is fair price to the consumers. Thus the
firms produce premium product in provisions of quality, durability and
appearance rather than NGP.
The objectives of this study inquire about the following questions:
1. What are the optimal values of inventory stocks of GP and NGP ?
2. What are the optimal prices of GP and NGP in price competition
marketing system ?
3. What is the optimal investment in technology to reduce carbon
discharge?
4. What are the impacts of government Tax and Subsidy and CSR on
optimal pricing and profits of both the products when market size is
not fully deterministic in practice?
To concentrate on the above questions, a CSR firm is considered
where an industrialist produces GP and NGP of similar items (substitute
products)in two firms in which one manufacturer of CSR firm produces
GP and other manufacturer of non CSR firm produces NGP. The demand
rate of NGP is linearly price sensitive and carbon emission index
dependent deterministic pattern, whereas the demand rate of GP con­
sists of linearly price sensitive terms, carbon emission index and un­
certain market size which are controlled by CSR activities. The demand
of GP is newsvendor pattern and price competition between two firms is
occurred in this model. In this case, GP and NGP struggle for market
share. The costs of carbon emission and CSR activities are considered in
this model, Moreover, Government tax & tariffs and subsidy are
included to the expected total profit of the firms. The expected total
profit of two firms under one umbrella of industrialist includes revenue
from sales of both items, procurement costs, salvage value of surplus
stock, penalty cost of stock out items, cost of CSR activities, taxes &
tariffs and subsidies. Then, the expected profit function is maximized
analytically considering stock quantity of green product, sales prices of
both the products and carbon emission index as decision variables.
The rest of the paper is structured as follows. Section 2 contains brief
literature survey. Assumptions and notations are presented in Section 3.
Formulation of the proposed model is provided in section 4. Section 5
illustrates numerical examples with managerial insights of the model.
Section 6 concludes the achievement of the model.
2. Brief literature survey
In 21st century; some ecological issues like global warming, GHG
affect, pollution and typical weather changes are directly associated to
the manufacturing industries which have destructive effects on human
activities. These growing environment problems can be solved only
when the consumers are responsible to save from harmful effects on
environment by using more green products. As a result, many firms have
started to produce green products and implement green marketing
strategies fulfilling consumers’ preferences to facilitate long term profit
in businesses. Green marketing intends to satisfy the consumers’ needs
and it reduces the harmful effects on the environment (Tiwari et al.,
2011) and it gives emphasize on promoting, pricing and distribution of
products keeping in mind eco-concern (Sarkar, 2012). Also, this business
strategies include packaging modification, manufacturing process and
green advertising (Yazdanifard and Mercy, 2011). Quite often, GO
provides incentive and punishment policies to put forth external positive
and harmful effect respectively (Sheu, 2011; Sheu and Chen, 2012). It is
observed that green marketing strategies consist of green supply chain
(GSC), green products design, packaging, pricing and promotion are
profitable to both the society and the environment. As a result, it has
given priority over conventional marketing initiatives (Yan and Yazda­
nifard, 2014). The affects of protection policies of environment by the
government are deliberated on three-level distributed programming
problem while the government offers subsidy and tax & tariffs for green
and non green SCM respectively (Hafezalkotob et al., 2016).
2
Journal of Retailing and Consumer Services 55 (2020) 102118
Pricing of green and non green products is an important factor that
has affect on demand of the members of SCM. Pricing strategies are
widely studied in SCM (Kuo et al., 2013; Niu et al., 2015; Wang et al.,
2015; Luo et al., 2017; Xu et al., 2017). Liu et al. (2016) showed that
more CEA generates more profit of the retailers and manufacturer who
follow eco-friendly operations under competition. Zang et al. (2015)
developed pricing strategies of green product in two-layer SC in which a
firm produces green and regular products simultaneously. Basiri and
Heydari (2017) studied green marketing strategies and quality decisions
of green products of the retailer and manufacturer in SCM. In two-layer
SCM, Zang et al. (2014) investigated the affects of consumers’
price-reference behavior on demands of both the manufacturers and
retailers. Zhu and He (2017) obtained closed form analytical results of
economic models of GP under price competition applying different game
theoretic approaches like coordinated supply chain, vertical competition
and horizontal competition of the chain. Hafezalkotob (2017) showed
that the profits of manufacturer and retailer under cooperative and
competitive frameworks are affected by government tariff mechanism
while manufacturer determined whole sale price and energy savings
level, and retailer determined the retail price. Heydari et al. (2017)
analyzed reverse and closed loop supply chain models of manufacturer
and retailer in light of government incentives to improve sustainable
consumption of the products. Hong et al. (2018a) focused on pricing
competition of GP and NGP, and suggested pricing and production
strategies to tackle the differential purchasing behaviors of the con­
sumers. Thereafter, Hong et al. (2018b) minimized costs of supply chain
configuration (SCC) problem of family of green products to make
continuous improvement of service time and increasing on-time de­
liveries at minimal costs incorporating holding costs, pipeline inventory
costs, production costs, subsidy of the government. They solved this
problem by hybrid algorithm comprising of spanning tree based algo­
rithm (STA) and particle swarm optimization (PSO) algorithm. Heydari
et al. (2018) found both the analytical and numerical optimal solutions
of profit functions of seller and buyer by controlling lead time, order
quantity and service level under different shipping modes of the goods in
a coordinated supply chain. Heydari and Ghasemi (2018) presented a
two-layer supply chain model of single manufacturer and single col­
lector where collector offered a reward to the customers who returned
their used products to the collector. In their model, reverse supply chain
coordination revenue sharing contract was studied where quality of
returned and remanufacturing capacity of the used products are un­
certain in practice. Jamali and Rasti-Barzoki (2018) showed that public
awareness encourages the consumers to buy more green products in
both centralized and decentralized systems of a green supply chain
(GSC). Dey and Saha (2018) suggested strategic inventory (SI) under
manufacturer’s Stackelberg (MS) game situation in which the retailer’s
strategic judgment received better profits of each member of GSC and SI
persuaded the manufacturer to progress greening level (GL). Roy et al.
(2018) argued that retailers inventory is important in multi-period
contracts where inventory is hold by the retailer between successive
periods. The characteristics of products, regulations, socio-economic
context and dynamic involvement of both GO and NGOs are major
affecting features in sustainable agricultural practices (Dania et al.,
2018). In a literature review of Jia et al. (2018) on GSC in perspective of
rising countries similar to Brazil, China, India, Malaysia and South Af­
rica, it was enlightened that deficient in government support and un­
cooperative traditions were most important hurdles of GSC. Dong et al.
(2019) made a comparison study of the profits of manufacturer and
retailer while manufacturer and retailer individually or simultaneously
invest to enhance the greenness level of the products for environmen­
tally conscious customers. Heydari et al. (2020) studied a tree-tier dual
channel (retail and e-channel) distribution systems of green products to
obtain optimal decisions of all channel members. He et al. (2019)
investigated a dual-channel closed-loop supply chain model considering
the impact of government incentive policy on the consumers. They
showed that amount of subsidy had noteworthy affect on selecting
S.S. Sana
channel structures by the manufacturer and the manufacturer privileged
to sell new products directly to the consumers if the government’s
financial support level was comparatively low.
The manufacturing industries is one of the most important causes of
Green House Gas (GHG) discharge and it is mounting bit by bit due to
insensible industrialists with the unaware customers of the products. It is
recognized that GHG is the main factor of global warming which will
worry for sustainable ecological system and human civilization. Chung
and Wee (2009) explained an integrated production inventory model
incorporating green product design and remanufacturing activities in
the manufacturing process. Chung and Wee (2011) extended a produc­
tion inventory model allowing for remanufacturing in GSC. The work of
Wee et al. (2012) is referred to the reader for thoughtful discussion of
green technologies and its visions. In their study, renewable energies,
energy supply chain, renewable energy performance are explained and
recommended some strategies to resolve its drawbacks. Modak et al.
(2018) formulated decentralized and centralized models of manufac­
turer and retailer supply chain taking into account of GHG emissions
trading plans. Modak (2018) surveyed the literature on research works
on development of reduction of GHG emission in SCM. Tiwari et al.
(2018) investigated a green manufacturing systems including
trade-credit facilities and imperfect recycle process. Sarkar et al. (2015)
discussed a economic production quantity (EPQ) model incorporating
variable setup cost, and carbon emission cost. Sarkar et al. (2016)
assembled a three-echelon SCM model together with both the change­
able transportation and the carbon emission costs.
Corporate social responsibility (CSR) has widespread operations
viewpoint in developing economies and it is in motions in the direction
of globalization through trade carry out by worldwide companies. Be­
sides GO and NGOs welfare schemes, enterprises should have social
responsibility which is inseparable from the environment, society,
economy, and stakeholders. Many companies have put into practice of
CSR in CS, for instance Apple, Hewlett Packard, Adidas, Wal-Mart, Nike,
etc.(Mao et al., 2016). Quite often, enterprises contribute in CSR with
the intention of enhance their reputes to deal management risks and
build consumers’ loyalty which increase sale of commodities indirectly.
Panda and Modak (2017) studied a close-loop supply chain where CSR
enhances the recycling rate of second-hand items which leads the
companies to reach better turnovers. Incorporation of CSR into the
classic structure of SCM and its blow on operations management are
important in both theory and practice. Kim (2019) employed structural
equation modeling in a mediation model to study job satisfaction of the
Korean workers using social network services. Bhadoria and Chaudhari
(2019) addressed a mathematical model in light of an architectural view
points of systems following service-oriented computing methodology.
Currently, study of supply chains allied with CSR is center of attention
on pricing strategies and coordination in SCM.
The main contributions of this proposed article are as follows:
i). Implementation of CSR to attract the environmental conscious
customers who are uncertain in practice to buy more green
products.
ii). Pricing competition between green and non-green products.
iii). Green technology to reduce carbon emission.
iv). Government tariff and subsidy mechanism.
The combination of the above issues in one model for studying the
pricing competition between green and non-green products is quite new
contribution in comparison with the previous literature.
2.1. Fundamental assumptions and notations
The subsequent assumptions and notations are well thought-out to
describe the proposed model.
Assumption:
3
Journal of Retailing and Consumer Services 55 (2020) 102118
1. Two firms under one industrialist produce green and non green
products. The firm 1 who produces green products implements CSR
activities in the society to attract the customers for buying more. The
firm 2 produces non green products, i.e., traditional goods who dot
implement CSR activities in the society.
2. The demand of the green product is newsvendor type with price,
level of CSR activities and carbon emission index sensitive. On the
other hand demand of non green product is price sensitive deter­
ministic pattern. As a result, there is price competition between two
firms.
3. The consumers are conscious about natural environment and like to
purchase the green product at fair price.
4. Stock out and stock surplus cases may occur for green products
whereas these cases do not occur in non green product. For stock out
and stock surplus cases, penalty cost for shortages and salvage value
for over stock are considered in this model.
5. The Government provide greater subsidy and tax rebate on pro­
curement cost of green products, whereas least subsidy and tax
rebate on procurement cost of non green products are given to the
firm 2. In fact, no subsidy and highest tax and tariffs are considered
for non green products which attract the investors to produce green
products at a large scale.
6. The selling prices of both type products, carbon emission index and
production lot size of green products are decision variables.
Notation:
Dg : Demand rate of green products.
Dng : Demand rate of non green products.
pg : Selling price per unit of green product. This is a decision variable.
png : Selling price per unit of non green product. This is a decision
variable.
Cg : Procurement cost per unit of green product.
Cng : Procurement cost per unit of non green product.
e0 : Carbon emission index per unit non green product.
e : Carbon emission index per unit green product. This is a decision
variable.
h : Penalty cost per unit shortage of green product.
v : Salvage value per unit surplus stock of green product.
r : Level of CSR activities provided by firm 1 ð0 � r < 1Þ.
Qg : Production lot size of green product.
Qng : Production lot size of non green products. It his case, Qng ¼ Dng .
x : The demand of the customers who are attracted by CSR activities
provided by firm 1.
fðxÞ : Probability density function of random variable x with mean μ
Z ∞
and fðxÞdx ¼ 1.
∞
FðxÞ : Probability distribution function of x, i.e., 0 � FðxÞ � 1Þ.
π : expected total profit of the firm 1 & 2.
3. Mathematical formulation
In this model, firm 1 produces GP and firm 2 produces NGP under
one umbrella of an investor. The demand of GP of environmentally
conscious consumers and demand of NGP are as follows:
�r�
�
Dg pg ; png ; e; r; x ¼ αa b1 pg þ b2 png ke þ x (1)
r
and
�
Dng png ; pg ; e ¼ ð1 αÞa b3 png þ b4 pg ke0 (2)
where að > 0Þ denotes potential market size. k is sensitivity coefficient of
demand per unit carbon emission, bi ði ¼ 1; 2; 3; 4Þ are sensitivity co­
efficients of demand per unit price. As demands are price sensitive, there
are a competition between firm 1 & 2. The empirical formulas of
S.S. Sana Journal of Retailing and Consumer Services 55 (2020) 102118

demand rate show that higher price of GP decreases its demand whereas � � �
demand of NGP increases, and similar phenomena occurs for demand of π 2 ¼ rpg Cg Qg h Dg Qg C0 ðe0 eÞ2 þ png Cng Dng þðS TÞCg Qg
NGP. The term rðr ¼ 1 r 2 ð0; 1ÞÞ is level of CSR activities of firm 1 and �
x is a random variable with p.d.f. fðxÞ and cumulative distribution þ ðð1 γÞS ð1þδÞTÞCng Dng subject ​ to Qg �Dg þ png Cng Dng (8)
function FðxÞ where fðxÞ > 0 and x 2 ½x; x�. The parameter αε ð0; 1Þ is a
convincing factor of the firm 1 to the society to be more environmentally When Stock surplus and stock out situations do not occur, i.e., Qg ¼ Dg ,
conscious that captures the market for GP. In this model, corporate so­ the profit is maximum that is
cial responsibility (CSR) includes medial health camp, scholar ships for � �
students (either meritorious or distress) and fund for small scale in­
πmax ¼ rpg Cg Dg C0 ðe0 eÞ2 þ png Cng Dng þ ðS TÞCg Dg
dustries, i.e., the stakeholders of the society who buy green products at �
large scale or take part in consumer environment awareness (CEA) þ ðð1 ð1 þ δÞTÞCng Dng þ png Cng Dng
γÞS (9)
programmes deliberately. As a result, a part of sales revenue is invested � �� �
by firm 1 for CSR and hence the cost of CSR is Now Qg � Dg implies Qg � αa b1 pg þ b2 png ke þ rr x . That
� �r � � means
Ccsr ¼ rpg αa b1 pg þ b2 png ke þ x (3) ��
r
r x� r ðQg ðαa b1 pg þb2 png keÞÞ ¼ z where z is the inventory
Due to global warming, the responsible manufacturer abide by the factor which represents risk free inventory level. Substituting the value
law of pollution prevention Act has to reduce carbon emission from of z and combining eqs. (7) and (8), the profit of the firm 1 & 2 is
manufacturing processes. As a result, the manufacturer needs to intro­ �
duce green technology to reduce carbon release ðeÞ per unit product that π¼
π1 ; for x < z
(10)
results in higher cost than the initial unit carbon emission ðe0 Þ. There­ π2 ; for x � z
fore, the manufacturer invests capital to reduce carbon emission e0 to a
where
level e ðe0 > eÞ per unit product which is
� �
π1 ¼ rpg ð1 þ T SÞCg αa b1 pg þ b2 png ke
Cemi ¼ C0 ðe0 eÞ2 (4)
��r�
þ rpg v ðT SÞCg x
where C0 is a cost coefficient for green technology to reduce carbon r
emission compared to e0 . As a whole the demand is stochastic in nature, ��r�
Cg v z
the following two cases may arise. The tax charged by the Government r
� �
and subsidy earned from the Government in case of green product is þ png Cng ð1 ð1 γÞS þ ð1 þ δÞTÞ ð1 αÞa b3 png þ b4 pg ke0
� �r� � C0 ðe0 eÞ2 ; for x � z (11)
GðT; SÞ ¼ ðS TÞCg αa b1 pg þ b2 png ke þ x (5)
r
and
Similarly, the tax and subsidy of the non green product is
� �
� π2 ¼ rpg ð1 þ T SÞCg αa b1 pg þ b2 png ke
NGðT; SÞ ¼ ðð1 γÞS ð1 þ δÞTÞCng ð1 αÞa b3 png þ b4 pg ke0 (6) ��r�
þ rpg þ h ð1 þ T SÞCg z
r
Here S (in percent) is subsidy on procurement costs of the products and T �r�
(in percent) is tax on procurement cost of the products. The parameters h
r
x
δ ð > 0Þ and γ ð0 < γ � 1Þ depend on the Government strategy. If the þ png Cng ð1 ð1
�
γÞS þ ð1 þ δÞTÞ ð1 αÞa b3 png þ b4 pg ke0
�
Government offers γ ¼ 1 (i.e., no subsidy for non green product) and
puts large value of δ, i.e., great tax for non green producer; then firm 2 of C0 ðe0 eÞ2 ; for x � z (12)
non green producer has to stop his business. Then green producer will Therefore, the total expected profit of the industrialist is
get monopoly business in the society. � �
Since the demand is stochastic in nature, the following two cases may EðπÞ¼ rpg ð1þT SÞCg αa b1 pg þ b2 png ke
arise.
Z Z
z ��r� z ��r�
f ðxÞdx þ rpg v ðT SÞCg xf ðxÞdx Cg v z
x r x r
3.1. Case- I: Stock surplus
Z z � �
When stock of the product is surplus, i.e., some items are unsold f ðxÞdx þ png Cng ð1 ð1 γÞS þð1 þδÞTÞ ð1 αÞa b3 png þb4 pg ke0
ðQg > Dg Þ; the manufacturer clears the stock at a lot with salvage price
x

vðv < Cg Þ per unit product. Hence the profit of the firm 1 and firm 2 as a Z z Z z �
whole is f ðxÞdx C0 ðe0 eÞ2 f ðxÞdx þ rpg ð1þ T SÞCg αa b1 pg
x x
� � � �
π1 ¼ rpg Cg Dg Cg v Qg Dg C0 ðe0 eÞ2 þ png Cng Dng
Zx Zx
� ��r�
þ ðS TÞCg Dg þ ðð1 γÞS ð1 þ δÞTÞCng Dng subject ​ to Qg > Dg (7) þb2 png ke f ðxÞdx þ rpg þh ð1þT SÞCg z f ðxÞdx
r
z z

�r� Z x
3.2. Case – II: Stock out h xf ðxÞdx þ png Cng ð1 ð1 γÞS þð1þδÞTÞ
�
r
z
This situation occurs when stock is insufficient to meet the demand
of the consumers of green product, i.e., Qg � Dg . In this case, a penalty
Zx Zx
cost for loss of goodwill with the consumers is considered. Here the �
ð1 αÞa b3 png þb4 pg ke0 f ðxÞdx C0 ðe0 eÞ2 f ðxÞdx
penalty cost h per unit item is higher than the procurement cost Cg , i.e.,
h > Cg . For feasibility of the model, pg > Cg > v > 0 , h > Cg and png >
z z

Cng . Here, the total profit is

4
S.S. Sana Journal of Retailing and Consumer Services 55 (2020) 102118
� �
¼ rpg ð1þ T SÞCg αa b1 pg þb2 png ke
� � k �
þ png Cng ð1 ð1 γÞS þð1 þδÞTÞ ð1 αÞa b3 png þb4 pg ke0 e ¼ e0 rpg ð1 þ T SÞCg (15)
2C0
Z Zx
��r� z �r�
Using, ∂E
¼ 0 in ∂E
¼ 0, we have
þ rpg v ðT SÞCg xf ðxÞdx h xf ðxÞdx ∂z ∂png
r x r � �
z
Z ð1 αÞa b3 png þ b4 pg ke0 b3 png Cng ð1 ð1 γÞS þ ð1 þ δÞTÞ
��r� z
Cg v z f ðxÞdx
r x � yields
Zx þ rpg ð1 þ T SÞCg ¼ 0��!
��r�
þ rpg þh ð1þ T SÞCg z f ðxÞdx C0 ðe0 eÞ2 1 � �
r png ¼ ð1 αÞa þ b4 pg ke0 þ Cng ð1 ð1 γÞS þ ð1 þ δÞTÞb3
z
2b3
� �
¼ rpg ð1 þT SÞCg αa b1 pg þb2 png ke þ png ��
þ b2 rpg ð1 þ T SÞCg (16)
� �
�r�
Cng ð1 ð1 γÞS þð1 þδÞTÞ ð1 αÞa b3 png þ b4 pg ke0 Now ∂E
∂pg ¼ 0 implies
��r�
h μ C0 ðe0 eÞ2 þ rpg þ h ð1þ T SÞCg z � �
r Z r r αa b1 pg þ b2 png ke þ b4 png Cng ð1 ð1 γÞS þ ð1 þ δÞTÞ þ rz
��r� z Z z
þ rpg vþh ðT SÞCg xf ðxÞdx
r x þr xf ðxÞdx
Z x
��r� z
Z
rpg vþh ðT SÞCg z f ðxÞdx (13) z �
r x rz f ðxÞdx rpg þ h ð1 þ T SÞCg b1 ¼ 0 (17)
x

Now our objective is to maximize EðπÞ while pg ;png ;e ​ and z are de­
Substituting the values of z; e and png in eq. (17), we have a nonlinear
cision variables.
equation of single variable pg . Then, solving eq. (17) we have optimum
Here, the derivatives of z and EðπÞ with respect to pg ; png ; e ​ and z are � �� �
as follows: values of p*g , p*ng , e* ; z* and Q*g ¼ αa b1 p*g þ b2 p*ng ke* þ rr z* ,

∂z kr ∂z b1 r ∂z b2 r Q*ng ¼ ðð1 αÞa b3 p*ng þ b4 p*g ke0 Þ.

¼ ; ¼ ; ¼ ;
∂ e r ∂ pg r ∂png r Now at stationary point ðz* ; e* ; p*g ; p*ng Þ,

∂2 E � ��r�
∂E ��r�
¼ rpg þ h ð1 þ T SÞCg ¼ rp*g vþh ðT SÞCg f ðz* Þ < 0
∂z r ∂z2 r
Z
��r� z
rpg vþh ðT SÞCg f ðxÞdx; ∂2 E ∂2 E � �
r x ¼ ¼ rp*g vþh ðT SÞCg kf ðz* Þ < 0
∂e∂z ∂z∂e
Z z
∂E � !
¼ kh þ 2C0 ðe0 eÞ rpg vþh ðT SÞCg k f ðxÞdx; ∂2 E ∂2 E Cg v
∂e x ¼ ¼r
∂pg ∂z ∂z∂pg rp*g v þ h ðT SÞCg
� � � �
∂E rp*g vþh ðT SÞCg b1 f ðz* Þ
¼ r αa b1 pg þ b2 png ke þ b4 png Cng ð1 ð1 γÞS þ ð1 þ δÞTÞ þ rz
∂ pg
Z z
þr xf ðxÞdx ∂2 E ∂2 E � �
x ¼ ¼ rp*g vþh ðT SÞCg b2 f ðz* Þ > 0
∂png ∂z ∂z∂png
Z z Z z � � k2 r
� ∂2 E
rz f ðxÞdx rpg vþh ðT SÞCg b1 f ðxÞdx ¼ 2C0 rp*g vþh ðT SÞCg f ðz* Þ < 0
x x ∂e2 r
!
∂E � � ∂2 E ∂2 E rp*g þ h ð1 þ T SÞCg
¼ ð1 αÞa b3 png þ b4 pg ke0 b3 png Cng ð1 ð1 γÞS þ ð1 þ δÞTÞ ¼ ¼ rk
∂png ∂pg ∂e ∂e∂pg rp*g v þ h ðT SÞCg
hb2 � � b kr
rp*g f ðz* Þ < 0
1
vþh ðT SÞCg
r
Z z
�
rpg vþh ðT SÞCg b2 f ðxÞdx ∂2 E ∂2 E � � b kr
¼ rp*g f ðz* Þ > 0
2
x ¼ vþh ðT SÞCg
∂png ∂e ∂e∂png r
At stationary point ðz* ; e* ; p*g ;p*ng Þ, ∂∂Ez ¼ 0; ∂∂Ee ¼ 0; ∂E
∂pg ¼ 0 and ∂∂pEng ¼ 0.
!
Therefore, ∂E
¼ 0 implies ∂2 E rp*g þ h ð1 þ T SÞCg
∂z ¼ 2b1 r
Z ! ∂p2g rp*g v þ h ðT SÞCg
z
rpg þ h ð1 þ T SÞCg yields 1 � � b2 r
f ðxÞdx ¼ ��!z ¼ F
x rpg v þ h ðT SÞCg rp*g v þ h ðT SÞCg 1 f ðz* Þ < 0
r
!
rpg þ h ð1 þ T SÞCg ∂2 E ∂2 E
(14) ¼
∂png ∂pg ∂pg ∂png
rpg v þ h ðT SÞCg

¼ 0 implies kh þ 2ðe0
∂E
∂e eÞ ðrpg þ h ð1 þ T SÞCg Þk ¼ 0,
using eq. (14). Hence the optimum value of eis

5
S.S. Sana Journal of Retailing and Consumer Services 55 (2020) 102118

!
rp*g þ h ð1 þ T SÞCg � �� �
¼ b4 þ b2 r E* ¼ rp*g ð1 þ T SÞCg αa b1 p*g þ b2 p*ng ke*
rp*g v þ h ðT SÞCg
� �b b r � �� �
þ rp*g f ðz* Þ > 0
1 2
vþh ðT SÞCg þ p*ng Cng ð1 ð1 γÞS þ ð1 þ δÞTÞ ð1 αÞa b3 p*ng þ b4 p*g ke0
r

∂2 E � � b2 r �r�
¼ 2b3 rp*g vþh ðT SÞCg 2
f ðz* Þ < 0 h μ C0 ðe0 e* Þ2
∂p2ng r r
� ��r�
3.3. Particular case þ rp*g þ h ð1 þ T SÞCg z*
r

When x follows uniform distribution, the density function is fðxÞ ¼ � ��r��z* 2 x2 �

8
> 1
9
> þ rp*g vþh ðT SÞCg
< ; x�x�x = r 2ðx –xÞ
x x with mean μ ¼ 12 ðx þ xÞ. In this case, � ��r� �z* x�
>
:
0; elsewhere
>
; rp*g vþh ðT SÞCg z*
r x –x
the inventory factor
! 3.4. Approximation of the expected profit function EðπÞ
*
rp*g þ h ð1 þ T SÞCg
z ¼ x þ ðx xÞ
rp*g v þ h ðT SÞCg
Rearranging eq. (13), we have
� �
k � * � AEðπÞ ¼ rpg ð1 þ T SÞCg αa b1 pg þ b2 png ke þ png Cng ð1
e* ¼ e0 rpg ð1 þ T SÞCg
2C0
� �
ð1 γÞS þ ð1 þ δÞTÞ ð1 αÞa b3 png þ b4 pg ke0 C0 ðe0 eÞ2
1 h� �
p*ng ¼ ð1 α Þa þ b4 p*g ke0 þ Cng ð1 ð1 γÞS þ ð1
2b3 ��r� �r
þ rpg v ðT SÞCg μ Cg v z
� �i r r
þ δÞTÞb3 þ b2 rp*g ð1 þ T SÞCg Zx
��r�
rpg vþh ðT SÞCg ðx zÞf ðxÞdx (18)
qffiffiffiffiffiffiffiffiffiffiffiffiffiffiffiffiffiffi r
j3 � j23 þ 4j1 j4 k2
1
z

p*g ¼ where j1 ¼ 2b1 r þ ðrÞ2 þ ðb2 r þ b4 Þ2 ;

2j1 2C0 2b3 Zx
� � Now Eðx zÞþ ¼ ðx zÞfðxÞdx ¼ 12 fEjx zj þEðx zÞg and
b2 r þ b4 � z
j2 ¼ ð1 αÞa ke0 qffiffiffiffiffiffiffiffiffiffiffiffiffiffiffiffiffiffiffi pffiffiffiffiffiffiffiffiffiffiffiffiffiffiffi
2b3
Ejx zj � Eðx zÞ2 ¼ σ2 þ z2 where σ is the standard deviation and
� μ is the mean of the sample. Therefore,
þ Cng ð1 ð1 γÞS þ ð1 þ δÞTÞb3 b2 ð1 þ T SÞCg
Zx
pffiffiffiffiffiffiffiffiffiffiffiffiffiffiffi
� � ðx zÞfðxÞdx � 12 f σ2 þ z2 ðz μÞg. Using this inequality in
k2
þr αa ke0 ð1 þ T SÞCg b4 Cng ð1 þ ð1 γÞS ð1 þ δÞTÞ þ rx z
2C0
� eq. (18), we have the approximated profit function as follows:
b1 h ð1 þ T SÞCg ; � �
AEðπÞ ¼ rpg ð1 þ T SÞCg αa b1 pg þ b2 png ke
� � x�
j3 ¼ v h þ ðT SÞCg j1 r x j2 ; �
2
þ png Cng ð1 ð1 γÞS þ ð1 þ δÞTÞ ð1 αÞa b3 png
� x� � �
j4 ¼ r x h ð1 þ T SÞCg þ j2 v h þ ðT SÞCg : � ��r� �r
2
qffiffiffiffiffiffiffiffiffiffiffiffiffiffiffiffiffiffiffi þ b4 pg ke0 C0 ðe0 eÞ2 þ rpg v ðT SÞCg μ Cg v z
r r
For feasibility of the model, pg > Cg ,i.e., j3 � j23 þ 4j1 j4 > 2j1 Cg � � n
� r 1 pffiffiffiffiffiffiffiffiffiffiffiffiffiffi o
rpg vþh ðT SÞCg σ2 þ z2 ðz μÞ
must hold. Here, p*g may have two positive roots or two negative roots or r 2
one positive and one negative or two complex roots. We shall consider (19)
the positive values of p*g and test the hessian matrix H at point ðz* ; e* ; p*g ; Now, the objective function AEðπÞ is to be maximized while pg ; png ;
p*ng Þ where e ​ and z are decision variables.
Here, the derivatives of z and EðπÞ with respect to pg ; png ; e ​ and z are
0 1
∂2 E ∂2 E ∂2 E ∂2 E as follows:
B ∂z2 ∂z∂e ∂z∂pg ∂z∂png C
B C ∂z kr ∂z b1 r ∂z b2 r
B C
B C ¼ ; ¼ ; ¼ ;
B ∂2 E ∂2 E ∂2 E ∂2 E C ∂e r ∂pg r ∂png r
B C
B ∂e∂z ∂e 2
∂ e∂p g ∂e ∂ p ng
C
B C � �
B
H ¼B C: ∂AE ��r� �� r � z
C ¼ Cg v rpg vþh ðT SÞCg pffiffiffiffiffiffiffiffiffiffiffiffiffiffi 1 ;
B ∂2 E 2
∂E ∂E 2 2
∂E C ∂z r 2r σ 2 þ z2
B C
B ∂pg ∂z ∂e∂pg ∂p2 ∂pg ∂png C
B g C
B C ∂AE � k �
B 2 2 2 2
C ¼ k rpg vþh ð1 þ T SÞCg rpg vþh ðT SÞCg
@ ∂E ∂E ∂E ∂ EA ∂e 2
∂png ∂z ∂e∂png ∂pg ∂png ∂p2ng
� �
z �
If the eigen values of H are all negative then our required optimum pffiffiffiffiffiffiffiffiffiffiffiffiffiffi 1 k Cg v þ 2C0 ðe0 eÞ;
solution is ðz* ; e* ; p*g ; p*ng Þ and optimum expected profit is
σ 2 þ z2

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S.S. Sana Journal of Retailing and Consumer Services 55 (2020) 102118

∂AE � � � �
¼ r αa ke þ b4 png Cng ð1 ð1 γÞS þ ð1 þ δÞTÞ
b1 pg þ b2 png ∂2 AE ∂2 E r z
∂pg ¼ ¼ pffiffiffiffiffiffiffiffiffiffiffiffiffiffi 1
∂pg ∂z ∂z∂pg 2 σ 2 þ z2
� r �pffiffiffi2ffiffiffiffiffiffiffiffiffiffi2ffi �
� �b � �
rpg v ðT SÞCg b1 þ rμ þ σ þ z ðz μÞ σ2
rp*g
2 1
� � v þ h ðT SÞCg 3=2
b1 � z 2 ðσ 2 þ z2 Þ
rpg v þ h ðT SÞCg pffiffiffiffiffiffiffiffiffiffiffiffiffiffi 1
2 σ 2 þ z2
∂2 AE ∂2 E � �b � σ2
�
¼ rp*g
2
� ¼ vþh ðT SÞCg ​ >0
∂AE ∂png ∂z ∂z∂png 2 ðσ 2 þ z2 Þ3=2
¼ ð1 αÞa b3 png þ b4 pg ke0
∂png
� � � r � k2 σ 2 �
b3 png Cng ð1 ð1 γÞS þ ð1 þ δÞTÞ ∂2 AE
� ¼ rp*g vþh ðT SÞCg <0
þ b2 rpg v ðT SÞCg ∂e2 2r ðσ2 þ z2 Þ3=2

� �
b2 � z
þ rpg vþh ðT SÞCg pffiffiffiffiffiffiffiffiffiffiffiffiffiffi 1 ∂2 AE ∂2 E 3 kzr
2 σ 2 þ z2 ¼ ¼ kr þ pffiffiffiffiffiffiffiffiffiffiffiffiffiffi
∂pg ∂e ∂e∂pg 2 2 σ 2 þ z2
At stationary point ðz* ; e* ; p*g ;p*ng Þ, ∂∂AE
z
¼ 0; ∂∂AE
e
¼ 0; ∂AE
∂pg ¼ 0 and ∂∂pAE ¼ � � b kr � �
ng σ2
rp*g
1
0. Therefore, ∂∂AE ¼ 0 implies v þ h ðT SÞCg 3=2
z 2r ðσ2 þ z2 Þ
σ
z ¼ qffiffiffiffiffiffiffiffiffiffiffi (20) � � b kr � �
∂2 AE ∂2 E σ2
¼ rp*g
2
j21 1 ¼ vþh ðT SÞCg ​ >0
∂png ∂e ∂e∂png 2r ðσ 2 þ z2 Þ3=2
!
rpg vþh ðT SÞCg � � b2 r � �
Where j1 ¼ rpg þvþh ð2þT SÞCg
∂2 AE
¼ 2b1 r rp*g vþh ðT SÞCg 1 σ2
<0
∂p2g 2r ðσ2 þ z2 Þ3=2
∂AE ¼ 0 implies
∂e

k � ∂2 AE ∂2 E
e ¼ e0 rpg ð1 þ T SÞCg (21) ¼
∂png ∂pg ∂pg ∂png
2C0
� �
Using, ∂AE
∂z ¼ 0 in ∂∂pEng ¼ 0, we have b2 r z
¼ b4 pffiffiffiffiffiffiffiffiffiffiffiffiffiffi 1
2 σ 2 þ z2
png ¼ j2 pg þ j3 (22) � �b b r� �
σ2
þ rp*g
1 2
vþh ðT SÞCg
where 2r ðσ2 þ z2 Þ3=2
� �
rb2 þ b4 ∂2 AE � � b2 r � σ2
�
j2 ¼
2b3 ¼ 2b3 rp*g vþh ðT SÞCg 2
<0
∂p2ng 2r ðσ 2 þ z2 Þ3=2

j3 ¼
1 If the eigen values of H are all negative then the required optimum
2b3
� solution is ðz* ; e* ; p*g ; p*ng Þ and its expected maximum profit is AEðz* ; e* ;
b2 ð1 þ T SÞCg þ ð1 αÞa ke0 þ b3 ð1 ð1 γÞS þ ð1 þ δÞTÞCng p*g ; p*ng Þ.
Now ∂∂AE
pg
¼ 0 implies
� � 3.5. Deterministic model
r αa b1 pg þ b2 png ke ð1 þ T SÞCg b1
rpg
� r �pffiffiffi2ffiffiffiffiffiffiffiffiffiffi2ffi �
When market is risk neutral, i.e., the demand of green product is
þ b4 png Cng ð1 ð1 γÞS þ ð1 þ δÞTÞ þ rμ σ þz ðz μÞ ¼ 0
2 deterministic in nature. In this case total profit is
(23)
�� r μ�
Substituting the values of z; e and png from eqs. (20)–(22) in eq. (23), π ¼ rpg ð1 þ T SÞCg αa b1 pg þ b2 png ke þ
r
we have a nonlinear equation of single variable pg . Then, solving eq. (23)
� � �
we have optimum values of p*g , p*ng , e* ; z* and Q*g ¼ αa b1 p*g þ b2 p*ng þ png Cng ð1 ð1 γÞS þ ð1 þ δÞTÞ ð1 αÞa b3 png þ b4 pg ke0
�� � C0 ðe0 eÞ2
ke* þ rr z* , Q*ng ¼ ðð1 αÞa b3 p*ng þ b4 p*g ke0 Þ.
(18)
Now at stationary point ðz* ; e* ; p*g ; p*ng Þ,
Now derivatives of π with respect to e, pg and png , we have as follows:
∂2 AE � �� r �� σ2
�
¼ rp*g vþh ðT SÞCg <0 ∂π �
∂z2 2r ðσ2 þ z2 Þ3=2 ¼ 2C0 ðe0 eÞ rpg ð1 T þ SÞCg k;
∂e

∂2 AE ∂2 E ∂π � r μ� �
¼ ¼ ¼ r αa b1 pg þ b2 png ke þ rpg ðT SÞCg b1
∂e∂z ∂z∂e ∂pg r
� �k� σ2
� �
rp*g vþh ðT SÞCg under0 ornameðÞ þ b4 png Cng ð1 ð1 γÞS þ ð1 þ δÞTÞ ;
2 ðσ 2 þ z2 Þ3=2
¼ mover ornameðÞ ¼ mroot ornameðÞ ¼0 mmultiscript0 ornameðÞ
0 0 0 0 ∂π � �
¼ rpg ð1 þ T SÞCg b2 þ ð1 αÞa b3 png þ b4 pg ke0
∂png
¼0 mtable0 �ÞÞ}! ð0Þ½? skipgroup� > : < 0 �
b3 png Cng ð1 ð1 γÞS þ ð1 þ δÞTÞ ;

At stationary point ð e* ; p*g ; p*ng Þ, ∂π

∂e ¼ 0; ∂π
∂pg ¼ 0 and ∂π
∂png ¼ 0. There­
fore, ∂π
∂e ¼ 0 implies

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S.S. Sana Journal of Retailing and Consumer Services 55 (2020) 102118

Fig. 1. Pricesðpg ; png Þ versus CSR level ðrÞ : blue color represents pg and red color represents png . (For interpretation of the references to color in this figure legend, the
reader is referred to the Web version of this article.)

Fig. 2. Profits from green and non green products versus CSR level ðrÞ : blue color represents profit from green product and red color represents profit from non green
product. (For interpretation of the references to color in this figure legend, the reader is referred to the Web version of this article.)

k � * � � �
e* ¼ e0 rpg ð1 þ T SÞCg : ¼ j11 p*g þ j12 ; where j11 ¼ b2 rþb4
and j12 ¼ 1
½ b2 ð1 þ T SÞCg þ
2C0 2b3 2b3

∂π
¼ 0 implies ðð1 αÞa ke0 Þ þ Cng ð1 ð1 γÞS þ ð1 þ δÞTÞb3 �.
∂png
Now ∂∂πpg ¼ 0 provides
1 h � �
p*ng ¼ ðb2 r þ b4 Þp*g b2 ð1 þ T SÞCg þ ðð1 αÞa ke0 Þ þ Cng ð1 j14
ðrÞ2 þ þ b4 Þ2 ;
2
2b3 p*g ¼ j13 ; where j13 ¼
k
2rb1 þ 2C 0
1
2b3 ðb2 r

i
ð1 γÞS þ ð1 þ δÞTÞb3

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S.S. Sana Journal of Retailing and Consumer Services 55 (2020) 102118

Fig. 3. Demands of green and non green products versus CSR level ðrÞ : blue color represents demand of green product and red color represents demand of non green
product. (For interpretation of the references to color in this figure legend, the reader is referred to the Web version of this article.)

Fig. 4. Carbon emission versus CSR ðrÞ.

� � � �
b2 rþb4 � � j14
j14 ¼ ð1 αÞa ke0 þCng ð1 ð1 γÞSþð1þδÞTÞb3 b2 ð1þT SÞCg j11 j13
þ j12 > Cng must hold.
2b3
Now, at stationary point ð e* ; p*g ;p*ng Þ, the 2nd order derivatives are as
� �
k2 follows:
þr αa ke0 ð1 þ T SÞCg b4 Cng ð1 ð1 γÞS þ ð1 þ δÞTÞ þ rμ
2C0
∂2 π ∂2 π ∂2 π ∂2 π ∂2 π ∂2 π
þ b1 ð1 þ T SÞCg ; ¼ 2C0 < 0; ¼ r < 0; ¼ ¼ 0;
∂e2 ∂pg ∂e ∂e∂pg ∂png ∂e ∂e∂png ∂p2g
� �
j14 ¼ 2b1 r < 0;
Therefore, p*ng ¼ j11 j13
þ j12 . For feasibility of this model,
The hessian matrix at stationary point is

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S.S. Sana Journal of Retailing and Consumer Services 55 (2020) 102118

Fig. 5. Pricesðpg ; png Þ versus Tax factor ðδÞ : blue color represents pg and red color represents png . (For interpretation of the references to color in this figure legend, the
reader is referred to the Web version of this article.)

Fig. 6. Profits from green and non green products versus Tax factor ðδÞ : blue color represents profit from green product and red color represents profit from non
green product. (For interpretation of the references to color in this figure legend, the reader is referred to the Web version of this article.)

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S.S. Sana Journal of Retailing and Consumer Services 55 (2020) 102118

Fig. 7. Demands of green and non green products versus Tax factor ðδÞ : blue color represents demand of green product and red color represents demand of non green
product. (For interpretation of the references to color in this figure legend, the reader is referred to the Web version of this article.)

Fig. 8. Carbon emission versus Tax factor.ðδÞ

H ¼ ð 2C0 r0 r 2rb1 rb2 þ b4 0rb2 þ b4 2b3 Þ. Here, the 2, C0 ¼ $10. The random variable x follows an uniform distribution
8 9
principal minors are H11 ¼ 2C0 < 0; H22 ¼ 4rb1 C0 ðrÞ2 > 0 as r ¼ > 1 >
< ; for x � x � x =
1 r < 1 and r < 4b1 C0 ; H33 ¼ ½2C0 ð4rb1 b3 ðrb2 þ b4 Þ2 Þ þ2b3 ðrÞ2 �h fðxÞ ¼ x x with xe½x; x� where x ¼ 100 units; x ¼
>
: >
;
2 2
0 if 2C0 ð4rb1 b3 ðrb2 þ b4 Þ Þ þ 2b3 ðrÞ > 0 holds. If the above principal 0; elsewhere
minors satisfy the restriction mentioned above, the stationary point 200 units, and mean μ ¼ 150 units. Then, the required optimal solu­
provides maximum profit of π. tions are: p*g ¼ $29:42, p*ng ¼ $19:20, z* ¼ 184:73 units, Q*g ¼ 105:27
units, Q*ng ¼ 23:21 units, e* ¼ 8:7 units, expected profit from green
4. Numerical example
product ¼ $1161:45 and profit from non green product ¼ -$201.54 as
demand of non green product is negative that does not arise in practice.
Example 1. The values of the parameters in appropriate units are
Example 2. When the market is risk neutral, the demands of the
considered to justify the proposed model as follows: α ¼ 60%, γ ¼
products are deterministic in nature. In this situation, the values of the
90%, δ ¼ 80%, r ¼ 20%, a ¼ 200 units, b1 ¼ 8:0, b2 ¼ 10:0, b3 ¼
parameters are α ¼ 60%γ ¼ 90%, δ ¼ 80%, r ¼ 20%, a ¼ 200 units,
12:0, b4 ¼ 5:0, Cg ¼ $10, Cng ¼ $8, v ¼ $5, h ¼ $15, e0 ¼ 10 unit, k ¼
b1 ¼ 8:0, b2 ¼ 10:0, b3 ¼ 15:0, b4 ¼ 10:0, Cg ¼ $30, Cng ¼ $28, μ ¼

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S.S. Sana Journal of Retailing and Consumer Services 55 (2020) 102118

Fig. 9. Pricesðpg ; png Þ versus subsidy factor ðγÞ : blue color represents pg and red color represents png . (For interpretation of the references to color in this figure
legend, the reader is referred to the Web version of this article.)

Fig. 10. Profits from green and non green products versus subsidy factor ðγÞ : blue color represents profit from green product and red color represents profit from non
green product. (For interpretation of the references to color in this figure legend, the reader is referred to the Web version of this article.)

150 units; e0 ¼ 10 unit, k ¼ 2, C0 ¼ $10. Then, the required optimal
solutions are p*g ¼ $90:18, p*ng ¼ $63:71, Q*g ¼ 61:04 units, Q*ng ¼ 6:24
units, e* ¼ 6:02 units, expected profit from green product ¼ $2426:23
and profit from non green product ¼ $168.05. Here, the affects of CSR
activities, awareness programmes, subsidy and tax of Government on
pricing, demands, carbon emission and profits are remarkably observed
in Figs. 1–16.
Example 3. When the distribution function is unknown, the approxi­
mation value of expected total profit AEðπÞ presented in eq. (19) pro­
vides near optimal solution of the profit function. In this case, The values
of the parameters in appropriate units are considered to justify the
proposed model as follows: α ¼ 60%γ ¼ 90%, δ ¼ 80%, r ¼ 20%, a ¼
200 units, b1 ¼ 8:0, b2 ¼ 10:0, b3 ¼ 12:0, b4 ¼ 5:0, Cg ¼ $10, Cng ¼ $8,
v ¼ $5, h ¼ $15, e0 ¼ 10 unit, k ¼ 2, C0 ¼ $10, σ ¼ 25 and μ ¼ 150
unit. Then, the required optimal solutions are: p*g ¼ $29:91, p*ng ¼
$19:46, z* ¼ 24:38 units, Q*g ¼ 64:01 units, Q*ng ¼ 23:94 units, e* ¼
8:69 units, expected profit from green product ¼ $868:00 and profit
from non green product ¼ -$214.12 as demand of non green product is
negative that does not arise in practice.
Both for Example 1 & 2, when r 2 ½0; 60%Þ, the price of green
product increases (Fig. 1) to compensate the cost due to high CSR that
results in lower demand (Fig. 3) as demand is price sensitive, As price of
green product increases, the price of non green product increases to earn
more and as a whole, the demand of non green product increases

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S.S. Sana Journal of Retailing and Consumer Services 55 (2020) 102118

Fig. 11. Demands of green and non green products versus subsidy factor ðγÞ : blue color represents demand of green product and red color represents demand of non
green product. (For interpretation of the references to color in this figure legend, the reader is referred to the Web version of this article.)

Fig. 12. Carbon emission versus subsidy factor.ðγÞ

because of the values of price elasticity parameters. The profit of green
product decreases with increasing of value of rwhere as the profit
(Fig. 2) of non green product increases with r which is quite natural in
practice. Moreover carbon emission is reduced with higher CSR
activities.
When tax factor ðδÞ increase the tax of non green product increase
(Fig. 5) but tax of green product is fixed here. In this situation price of
non green production increase due to higher tax that results in higher
demand (Fig. 7) of green product by reducing sales price of green
product. As tax ix fixed for green product, the profit (Fig. 6) of green
product increase due to higher demand and profit of non green product
decrease for low demand and higher tax. Moreover carbon emission is
reduced with higher CSR activities. In Example 2, the carbon emission
increase due to decrement of price of green product. For Example 1,
there are some unlike nature in pricing because of uncertain demand
and its corresponding stock of the green products.
From Fig. 9, it is observed that the price of non green product in­
crease with decreases in subsidy, i.e., increases of γ. In this situation firm
1 of green producer decrease its selling price to sale more for big profit.
This affect is visible in Fig. 10 where profit of green product increases
and profit of non green product decreases simultaneously with increases
values of γ. Fig. 11 shows that demand of green product increase due to
lower price and demand of non green product decreases due to higher
selling price. Fig. 12 shows that carbon emission increases with
increasing values of γ because the price of green product decreases with
γ. For Example 1, there are some unlike nature in pricing and carbon
emission because of uncertain demand and its corresponding stock of the
green products.

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S.S. Sana Journal of Retailing and Consumer Services 55 (2020) 102118

Fig. 13. Pricesðpg ; png Þ versus convincing factor ðαÞ : blue color represents pg and red color represents. (For interpretation of the references to color in this figure
legend, the reader is referred to the Web version of this article.)

Fig. 14. Profits from green and non green products versus convincing factor ðαÞ: blue color represents profit from green product and red color represents profit from
non green product. (For interpretation of the references to color in this figure legend, the reader is referred to the Web version of this article.)

If the firm 1 does awareness programme frequently in the society, it
can capture the market (Fig. 13) in large scale, i.e., if α increases by
consumer awareness programme. In this case, the demand of green
product increases with α and demand (Fig. 15) of non green product
decreases with α: As a whole, both the prices of green and non green
products increases to compete each other. Fig. 14 shows that the profit of
green product increases due to higher demand and profit of non green
product decreases due to smaller demand in the market. The carbon
emission (Fig. 16) decreases due to higher profit of the firm 1. This fact is
rational because firm can more invest in green technology to reduce
carbon emission due to higher profit from the firm.
5. Conclusion
This paper examines the pricing strategy for a green product which
compete with non green product under green strategies like low carbon
emission and CSR activities of the green producer. In the above results
show that the consumers are to be attracted towards green product if

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S.S. Sana Journal of Retailing and Consumer Services 55 (2020) 102118

Fig. 15. Demands of green and non green products versus convincing factor ðαÞ: blue color represents demand of green product and red color represents demand of
non green product. (For interpretation of the references to color in this figure legend, the reader is referred to the Web version of this article.)

Fig. 16. Carbon emission versus convincing factor ðαÞ.

price are fair and the CSR activities of the firm is more implemented to
the society, i.e., the value of r is higher. Moreover, the demand of green
product will be increased when CEA programmes are held frequently in
the society, i.e., the value of α is higher. Besides firms’ activities, Gov­
ernment’s strategies may control the use of NGP and may bring attention
of the firms to produce GP, implementing higher tax & tariffs and no
subsidy to the non green producer. In this case, the values of δ and γ are
higher. If the Government strictly puts into effects of green policy
accompanied supply chain members adopting appropriate tax and sub­
sidies, the GP can capture the market. Although environmental tax and
tariffs and subsidy are the affective parameters to develop the green
products, the CSR firms ma profit more by capturing the market at fair
sales price in long term businesses. Many firms are not being interested
to produce and develop green products because of high investment that
results in high sales price. This model helps to the management of a firm
to attract the customers to purchase more green products by imple­
menting proper CSR activities and green technology. The findings from
the results assure the firm manager to give attention on the green
product development as government is offering high subsidy and lower
tariffs for green products.
Since going to green alarm of environment is urgent to the society,
the firms and Government have begun consumers’ awareness pro­
grammes to make changes in purchasing behavior of the consumers.
Green marketing, pricing, promotion and product development are the
best ways to put forward a business that is to be able to obey the rules
and Acts of the Government. As a result the firms’ managers have given
right of way on these topics besides usual marketing initiatives. More­
over, firms have to make sure that the value of green product in terms on
quality, design and visual appeal must compatible with price of the
product. Eco-labels on the package is also an imperative feature as it
makes available for consumers with an authentic information of a
product’s social and ecological permits. If the firms’ managers put into
operation of green marketing and green product developments unsuit­
ably, then it leads to the incident of problems that may weigh down to
the firm in future.
To capture the market for green products, there are limitations of
potentialities of three societal actors: businessmen, consumers and
government. The profit oriented business attitudes which do better than
its competitors is a great obstacle to be going green while the concern
firms focus on profit making rather than maximizing social value.

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S.S. Sana
Structure of social value including environmental value is a challenging
task to the firms who can improve their overall performance. Awareness
of the consumers about the products, pricing, service after purchasing,
durability are another limitations in consumers’ perspectives because
consumers demand goods and services at fair price that consequence the
greatest good for society. It is government’s responsibility to facilitate
and manage the above issues, optimizing the diverse and competing
interests of the actors in the environmental contest. In practice, hundred
percent pollution free manufacturing is not possible, industry can put
into practice nonstop improvement to decrease its waste and to enhance
the proportion of production inputs which are renewable. In global
marketing system, government’s role is at minimal level, essentially
limited to enforcing agreements and tort laws. However, the firms
should sacrifice short-term profits identifying green marketing schemes
as a groundwork for future growth and its profit of scale would create
green investments in the future.
However, government regulation is not remedy for green marketing
and green developments of the products. It is important to appreciate
that capital possession from sustainable green products are achievable
and may manufacture less societal harm than overstress on capital
possession by giant multinational companies. Recently, government
industries/firms are being diminished that results in more privatization
of the industries and consequently profit making mechanism rather than
societal value is prevailing in the society. Government ownership may
render null and void the trend on the way to privatization that is
beneficial to the society. Generally speaking, societal problems caused
by micro-macro divergences are the accountability of government to
resolve and citizens have accountability to ensure that their government
is rewarding its responsibilities.
Although the demand of green products is mixture of deterministic
and stochastic in nature, there are some limitations in this model. One
major limitation is that the cost and profit parameters are static, not
dynamic with time. This model could be extended considering the
varying cost and profit parameters with time in future. The time value of
money and inflation may also be considered in future model. This model
may be analyzed in long-term business incorporating capital investment
in green technology for green manufacturing. Many issues related to
policies of government, environmental scientists, businessmen’s sacri­
fice and consumers responsibility to the society may be included to
extend the present model in future.
Appendix A. Supplementary data
Supplementary data to this article can be found online at https://doi.
org/10.1016/j.jretconser.2020.102118.
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S.S. Sana Journal of Retailing and Consumer Services 55 (2020) 102118

Dr Shib Sankar Sana is currently Principal of Kishore Bharati

Bhagini Nivedita College under the University of Calcutta. He
served at the Department of Mathematics as Associate Professor
in Bhangar Mahavidyalaya from 2001 to 2018 and Department
of Applied Mathematics, Birla Institute of Technology, Mesra,
Ranchi as an Associate Lecturer during1999-2001.His main
areas of research are the modelling of production planning and
inventory control, Biomathematics and Soft Computing. He has
published over 160 papers in Journal of cleaner Production,
European Journal of Operational Research, International
Journal of Production Economics, Computers and Mathematics
with Application, Mathematical and Computer Modelling,
Applied Mathematics and Computation, Journal of Modelling
in Management, American Journal of Mathematical and Man­
agement Sciences, International Journal of Systems Science,
Far East Journal of Applied Mathematics, Nonlinear Phenom­
ena in Complex Systems, Advanced Modeling and Optimiza­
tion, Vietnam Journal of Mathematics, Yugoslav Journal of
Operational Research, International Journal of Operational
Research, International Journal of Services Operations Man­
agement, International Journal of Modeling, Identification and
Control, International Journal of Innovative Computing and
Application, International Journal of Procurement Manage­
ment, International Journal of Mathematics and Operations
Research, IMA Journal of Management Mathematics, Interna­
tional Journal of Information and Decision Science, Indian
Journal of Industrial and Applied Mathematics, International
Journal of Management Science and Engineering Management,
Applied Mathematical Modelling, Decision Support Systems,
Service Science, Review in Aquaculture, International Journal
of Production Research, Expert Systems with Application,
Economic Modelling, Journal of Manufacturing Systems,
Journal of Advanced Manufacturing Systems, Journal of In­
dustrial & Management Optimization, Annals of Operations
Research, International Journal of Logistics Research and Ap­
plications, Computers & Industrial Engineering, Journal of
Intelligent Manufacturing, International Journal of Applied and
Computational Mathematics, RAIRO-Operations Research,
CIRP Journal of Manufacturing Science and Technology, Con­
trol and Cybernetics, Cybernetics and Systems, etc. He is a
member of the editorial board of American Journal of
Computational and Applied Mathematics, Universal Journal of
Applied Mathematics, International Journal of Advanced
Mathematics, American Journal of Industrial and Business
Management. My Google Scholar address is : https://scholar.
google.co.in/citations?user¼WehwoJ0AAAAJ&hl¼en

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