Pollution accumulation and abatement policies in two supply chains under vertical and horizontal competition and strategy types

•The main drivers for pollution are a volume effect and a polluting effect.•Vertical integration induces greater volume effect than horizontal competition.•Horizontal competition induces greater polluting effect than vertical integration.•The least polluting configuration combines horizontal integration and vertical competition.•A commitment strategy is more environmentally friendly than a contingent strategy This research investigates the impact of both horizontal and vertical competition, on the one hand, and strategy types (commitment-based versus contingent-based equilibrium strategies), on the other hand, on the pollution accumulated by two supply chains over time. We consider a two-stage game model where two manufacturers and two retailers are involved in a wholesale price contract, in order to supply the demand over a finite time horizon. In the first stage of the game, the manufacturers set their respective optimal transfer prices. During the second stage, polluting emissions are created over time in proportion with demand, which is controlled by the retailers’ respective consumer prices. In this stage, the manufacturers are involved in emissions abatement. In this setup, we seek to identify the combination of market structure and strategy type that leads the two supply chains to generate the lowest pollution intensity and the highest level of abatement intensity.