Punishing or subsidizing? Regulation analysis of sustainable fashion procurement strategies

We compare two fashion procurement strategies: control and agency with considerations of sustainability. The retailer and the logistic service provider gain more profits under the control strategy, but the manufacturer gains less. The retailer orders more under the control strategy, which makes the supply chain less sustainable. A punishing regulation can reduce the retailer's order size but cannot change its procurement strategy. A subsidizing regulation can induce the retailer to change its procurement strategy if the subsidy is sufficiently large.