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Research on production decision-making considering consumers' environmental awareness and enterprise's bounded rationality
ZHENG Junjun, WANG Lu, WANG Xiangmin, XU Mingyuan
Systems Engineering - Theory & Practice
2018, 38 (10):
2587-2599.
DOI: 10.12011/1000-6788(2018)10-2587-13
This paper studies how enterprise makes production decision of traditional product and green product based on the assumption of perfect rationality and bounded rationality respectively, considering consumers' environmental awareness, under the cap-and-trade mechanism of emission permits. Through the analysis of joint production and separate production of the two products under the above assumptions, some conclusions are drawn. Under the assumption of perfect rationality, there is a range of green subsidy when the two products are jointly produced, which makes the company's total output increases and total discharge decreases with the consumer's environmental awareness increases. At the same time, the output and discharge of joint production are all smaller than those of the separate production, while the total profit is quite the contrary. The above results are still valid under the assumption of bounded rationality. The difference is that the difference of expected production, expected discharge, and expected profit under the two modes are decrease with the increases of the degree of bounded rationality. No matter which production mode the enterprise adopts, the expected production and expected discharge under the assumption of bounded rationality are always higher than Nash equilibrium, while the expected profit is the opposite. What else, the former and the latter increases and decreases with the degree of bounded rationality respectively. Therefore, when enterprises produce multi-category products, joint production has more advantages than separate production, but the advantages will decrease with the degree of bounded rationality increases. What's more, bounded rationality can lead to the formation of "bullwhip effect", which must be taken seriously by enterprises.
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