Analysis on the Optimal Subsidy Strategy of Government in Green Supply Chain

Abstract

In order to study the role that the government played in the green supply chain, we constructed a supply chain model by two kinds of manufacturers, consumers and government environmental fund, on this basis, the optimal government subsidies and products' optimal production and price were obtained by game theory and utility function. Then, according to the results of numerical example we draw the conclusion that if the government adopts optimal subsidies policy, social welfare will be substantially increase, and the demand for green products will rise too, on the other side, the prices will be bring down. It is shown that with the guidance of the government subsidy mechanism, the green supply chain will be on the track that is conducive to the rapid development of environmental protection.