The paper investigates newsvendor problem for a dyadic supply chain in which both the supplier and the retailer have the preference of status-seeking with fairness concerns. Nash bargaining solution is introduced as the fairness reference point and equilibrium results are derived. The effects of fairness-concerned status-seeking behaviors on optimal decisions as well as channel efficiency are further analyzed. It is shown that the channel efficiency will decrease because of such behavioral preference. The retailer’s share will be larger when the supplier concerns fairness less, and the supplier’s sensitivity to fairness plays a relatively more important role for the channel efficiency. Additionally, another interesting managerial insight is concluded that fairness concerns will not change the status of channel coordination in certain conditions. More specifically, those contracts able (unable) to coordinate fairness-neutral supply chain, based on affine transformations with scale factors within certain ranges, still succeed (fail) to coordinate the fairness-concerned. Furthermore, several insights on bargaining powers are given as well.

People exhibit peer-regarding fairness concern when others who are in similar circumstances are treated unfairly. The fairness concern derives from a sense of sympathy or schadenfreude. We study it in a distribution channel where a supplier deals with two retailers located at independent markets. Sympathy means the decrease of the retailer’s utility because he believes that his peer’s unfair treatment is undeserved, while schadenfreude indicates the utility increase as the unfair treatment is perceived deserved. The two retailers are offered wholesale prices sequentially and set their retail prices if they accept the offers. In our paper, the second retailer has the peer-regarding fairness concern. We show the following in regards to this idea: (i) the retailers’ profits and the distribution channel performance can be improved by the peer-regarding fairness concern for sympathy; (ii) the retailers’ profits and the channel performance can be reduced by the peer-regarding fairness concern for schadenfreude; and (iii) the peer-regarding fairness concern for sympathy is unfavourable to the supplier, and the second retailer may be punished separately if the concern is not strong enough, while the supplier benefits from the peer-regarding fairness concern for schadenfreude and may exploit the second retailer solely if the schadenfreude parameter is large.

The paper addresses the issue of manufacturer's optimal production policy under stochastic demand in an emission 'cap and trade' system, in which emission permit becomes another essential factor for production. Three typical sources of emission permits are considered, including emission quota allocated by the government, permits purchased via emission trading, and emission savings via purification. The emission-dependent manufacturer will balance a tradeoff to enable effective production and to determine an appropriate production scale to maximise expected profit. With these considerations in mind, two different cases of single- and multi-time purification are investigated respectively, and the optimal emission-dependent production models are proposed. Moreover, the existence and uniqueness of the optimal policy are guaranteed, and several valuable managerial insights are further concluded.