Decision-making models for promoting consumption of low energy-intensive broadband terminal products in the Chinese telecommunication industry
| Date | 05 February 2018 |
| DOI | https://doi.org/10.1108/IMDS-04-2017-0141 |
| Published date | 05 February 2018 |
| Pages | 262-282 |
| Author | Qing Liu,Senlin Zhao,Qinghua Zhu |
| Subject Matter | Information & knowledge management,Information systems,Data management systems,Knowledge management,Knowledge sharing,Management science & operations,Supply chain management,Supply chain information systems,Logistics,Quality management/systems |
Decision-making models for
promoting consumption of low
energy-intensive broadband
terminal products in the Chinese
telecommunication industry
Qing Liu
Faculty of Management and Economics,
Dalian University of Technology, Dalian, China
Senlin Zhao
School of Economics and Management,
Shanghai Maritime University, Shanghai, China, and
Qinghua Zhu
Department of Operations Management,
Shanghai Jiao Tong University, Shanghai, China
Abstract
Purpose –The purpose of this paper is to extend game analysis to explore decision-making mechanisms for
promoting a specific type of products, low energy consumption for individual one while the total energy
consumption is huge due to the high quantity of sales, that is, low for individual and high for total (LIHT) in
terms of energy consumption.
Design/methodology/approach –Game models are developed to compare decisions of optimal prices for
newly developed and environmentally friendly (NDEF) and regular products as well as associated sales quantity,
profits, carbon emissions under different governmental policies, along with a case of low energy-intensive
broadband terminal products in the Chinese telecommunication industry under the carbon tax and subsidy policies.
Findings –For both NDEF and regular products, optimal prices decrease under the subsidy policy
while both increase under the tax policy. Manufacturers’decision of optimal prices is highly relevant
with unit carbon tax/subsidy and the consumers’preference. Both the tax and subsidy policies can
improve consumption of NDEF products while the subsidy policy can be more effective at the current
initial stage.
Research limitations/implications –This paper provides decision support for manufacturers to promote
sustainable consumption of LIHT products. Research ideas on models development and solutions for optimal
prices can be applied to other LIHT products.
Practical implications –The results provide insights for governments on how to effectively evaluate and
motivate sustainable consumption for LIHT products.
Originality/value –This paper first explores how to motivate sustainable consumption of LIHT products
by developing models, examining effectiveness of potential governmental policies as well as associated
carbon emissions.
Keywords Game theory, Sustainable consumption, Carbon tax, Eco-friendly subsidy,
Low energy-intensive product, Telecommunication manufacturer
Paper type Research paper
Nomenclature
ΔThe telecommunication broadband
terminal market size.
c
ψ
The production cost per NDEF ONU
including appointed design investment.
Industrial Management & Data
Systems
Vol. 118 No. 1, 2018
pp. 262-282
© Emerald PublishingLimited
0263-5577
DOI 10.1108/IMDS-04-2017-0141
Received 10 April 2017
Revised 24 June 2017
8 August 2017
Accepted 18 August 2017
The current issue and full text archive of this journal is available on Emerald Insight at:
www.emeraldinsight.com/0263-5577.htm
This work is supported by National Natural Science Foundation of China (Nos 71632007, 71690241,
71472021, and 71702101).
262
IMDS
118,1
c
φ
The production cost per regular
ONU.
p
ψ
The selling price of unit NDEF ONU.
p
φ
The selling price of unit regular ONU.
δThe value ratio of unit regular
ONU relative to unit NDEF ONU
product.
q
ψ
The total demand for NDEF ONUs.
q
φ
The total demand for regular ONUs.
ΦThe carbon tax per regular ONU.
ΨThe subsidy for unit NDEF ONU.
π
ψ
The profit for the NDEF
manufacturing department.
π
φ
The profit for the regular
manufacturing department.
e
φ
The carbon emission for unit
regular ONU.
e
ψ
The carbon emissions for unit
NDEF ONU.
E
GHG
Greenhouse gas emissions intensity.
1. Introduction
Due to the stricter regulations and pressures from stakeholders such as non-governmental
organizations, manufacturers have been required to be responsible for carbon emissions of
their products through the whole life cycles (Garg et al., 2013; Gemechu et al., 2012). As a
result, manufacturers have carried out life cycle assessment of their products and integrated
assessment results into their decision makings (Tsai et al., 2011) to reduce carbon footprints
of their supply chains (Caro et al., 2013). From the life cycle perspective, some products such
as automobiles, appliances and buildings bring the most carbon emissions during the use
stage. Thus, sustainable consumption has gained increasing attention by both governments
and manufacturers. Governments have developed both “stick”(Pereira et al., 2016) and
“carrot”(Guo et al., 2016) policies on sustainable consumption by motivating manufacturers
to produce green products. For example, for energy-intensive products, manufacturers have
to comply with related regulatory requirements of energy consumption for their products
(Kuo et al., 2016; Liang et al., 2016; Xu et al., 2016). On the other hand, leading manufacturers
may also gain subsidy from governments (Guo et al., 2016; Yu et al., 2016) while at the same
time they can promote their products through green marketing (Peano et al., 2015).
Therefore, manufacturers have been motivated to upgrade or redevelop their products with
lower energy consumption.
Unfortunately, governmental policies are uncertain while green marketing cannot be an
effective approach for promotion of a certain type of energy-int ensive products.
For such products, an individual one consumes low energy while the total energy
consumption is huge due to the high quantity of sales, that is, low for individual and high for
total (LIHT) in terms of energy consumption. For example, an optical network unit (ONU), a
terminal that is used by families to access the broadband network, consumes 6.57 kilowatt
hours in one year (0.018 kilowatt hour in full power in one hour for one day), which is not
much for one family. However, only for one Chinese telecommunication manufacturer, about
70 million sets of its ONUs were used in China in 2016. As a result, the total energy
consumption is huge. With a new design, such an ONU can reduce electricity consumption
by 11.1 percent. Until now, the Chinese government has not realized the totally huge
electricity consumption for use of ONUs and potential saving, and thus no policies on
energy saving exist for such products. The telecommunication manufacturers in developed
countries have realized that eco-design for products is very important to achieve
environmental and economic performance simultaneously ( Jackson et al., 2016). Learning
from their international counterparts, leading Chinese telecommunication manufacturers
have also made efforts to design and produce more environmental-friendly products (Zhu
and Liu, 2010). Questions regarding to whether and when they should replace old ONUs
with newly developed and environmentally friendly (NDEF) ones are still management
challenges for their decision making.
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Decision-
making models
for promoting
consumption
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