Analysis of low carbon subsidies under different supply chain structures

Abstract

This paper mainly focuses on the impact of supply chain structures and the government's low carbon subsidies on the manufacturer and the retailer's profit, and conditions that encourage manufacturer reduce carbon emission voluntarily. To solve this problems, this paper established the Stackelberg game model and Vertical Nash game model to study how the reduction of carbon emission and the proportion of government subsidies influence product sales price, manufacturer and retailer's profit. The Results show that when the manufacturer gets low carbon subsidies, the retailer's profit and the manufacturer's profit and total profit increases under certain conditions after manufacturer reduces carbon emission; When the retailer gets low carbon subsidies, the retailer's profit and manufacturer's profit and total profit increases under certain conditions after manufacturer reduces carbon emission; When the manufacturer and retailer gets low carbon subsidies at the same time, the profit of retailer increases under no conditions, the manufacturer's profit and total profit increases under certain conditions after manufacturer reduces carbon emission. The empirical analysis shows that when the manufacturer and retailer gets low carbon subsidies at the same time, the total profit is biggest among three game models; when the manufacturer gets low carbon subsidies, the profit of manufacturer is biggest among three game models; when the retailer gets low carbon subsidies, the profits of retailer is biggest among three game models. Therefore, in order to encourage manufacturers to reduce emissions voluntarily, the relevant government departments in the development of subsidies should give priority to the manufacturer. In addition, the problem also throws interesting insights into the strategies of manufacturers and retailers.