Abstract
Government subsidies are a common policy adopted to promote energy conservation and emission reduction. The decision-making that occurs within the green supply chain for energy-saving products under government subsidies is an area of great academic interest and game theory is becoming a popular tool in such research. In this paper, we examined centralized and decentralized decision-making models for the green supply chain and a coordinated decision-making model for revenue-sharing contracts based on game theory. We studied the effects of government subsidies on retail prices, energy conservation levels, market demand, supply chain profits, and social welfare for energy-saving products. We then compared the effectiveness of the three models using a numerical example. Our results revealed the range of contract parameters for which manufacturer and retailer profits increase. Our results show that government subsidies can significantly improve social welfare and promote the improvement of energy-saving products. Centralized decision-making generates higher profits than decentralized decisions and government subsidies were positively correlated with the level of energy conservation, product prices, and market demand. Revenue sharing contract coordination decisions can coordinate the supply chain and achieve the same effect as centralized decisions.
Highlights
From the perspective of both theory and practice, sustainable development is a very important issue
We found a way to improve profits in a green supply chain when the government provides production subsidies for manufacturers and the subsidies can be shared with retailers through a reduction in the wholesale price
We developed decision models based on centralized, decentralized, and contract-based two-way revenue sharing
Summary
From the perspective of both theory and practice, sustainable development is a very important issue. Through the comparison of centralized decisions, decentralized decisions, and contract coordination decisions, we can help the manufacturer, retailer, and consumer to choose the optimum decision scheme In this context, we designed the present study to develop a new method of subsidy implementation that accounts for the needs of all stakeholders. (1) We simultaneously account for the product’s energy-saving level, enterprise R&D costs, government subsidy costs, social welfare considerations related to the product’s retail price, market demand, and profit throughout the supply chain. Accounting for these factors makes the decision-making scheme more complete.
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