Author: Amir Jamali
Advisor: Professor Renata Konrad
Category: Graduate
Abstract: Consumers are increasingly conscious of the ethical and environmental impacts of production and seek out firms with sustainable supply chains. We simultaneously examine efforts to combat child labor while encouraging environmentally sound practices in cocoa production. Underscoring the multidimensional nature of sustainability, we introduce a dual-stage supply chain framework featuring a producer and buyer. Importantly we recognize that a producer may not disclose to the buyer their use of child labor in place of higher-cost legitimate labor to increase profit. No framework exists for evaluating both environmental and social sustainability dimensions for all agents in a supply chain against such a background of asymmetric information. This study is motivated by the design of incentive-compatible contracts to ascertain transparency and fair practices in cocoa production. Thus, we introduce a game-theoretic model to evaluate optimal strategies under symmetric and asymmetric information scenarios. We found that relying solely on consumer pressure for sustainability led to inadequate incorporation of sustainable practices in the supply chain. Additionally, heightened consumer sensitivities to child labor negatively impacted environmental sustainability efforts. Our analysis revealed that, under specific consumer sensitivity levels, external oversight is essential for promoting sustainability in cocoa production. Notably, under asymmetric conditions, buyers perceive that avoiding child labor enhances profitability, prompting greater transparency regarding their labor practices.
UN SDGs:
SDG 8 – Decent Work and Economic Growth
SDG 11 – Sustainable Cities and Communities
SDG 12 – Responsible Consumption and Production
SDG 17 – Partnerships for the Goals
Video Presentation:
Poster Presentation:
GR4_Unveiling the Shadows_Presentation GR4_Unveiling the Shadows_Poster