Carbon Footprint Reduction for Product Returns: Impacts of Return Freight Insurance
研究了电商退货运费保险如何影响零售商在碳减排技术上的投资，发现该保险对高、低质量零售商有不同作用，并在特定条件下实现利润与环境双赢。
In e-commerce, excessive product returns have generated severe environmental problems. While green technology investment and stringent return policies are potential mitigations, the lenient return freight insurance strategy is widely adopted in practice. Nevertheless, it remains unclear how firms should invest in green technology under return freight insurance and what impact such insurance has on the environment. To explore these issues, we construct a model where a retailer sells products to consumers who are uncertain about product quality and concerned about the carbon footprint of potential returns. Our findings show that return freight insurance changes retailer preferences for carbon reduction investment, prompting the low-quality retailer to increase investment while encouraging the high-quality retailer to decrease investment. The analysis also reveals that return freight insurance can lead to better environmental performance at high premiums, even when the high-quality retailer invests less in carbon reduction technology or the low-quality retailer faces higher return volumes caused by the insurance. Moreover, return freight insurance always creates a conflict between profit and environment for the high-quality retailer. By contrast, if the retailer sells low-quality products, the insurance can simultaneously increase profit and reduce overall carbon footprints, resulting in a “win-win” outcome when consumer eco-consciousness is high and the insurance premium is low. Finally, we verify the robustness of results through multiple model extensions. Our study sheds light on how return freight insurance can serve as a crucial instrument for online retailers when integrated with carbon footprint reduction.