Enterprises’ decision-making under government green subsidy and information asymmetry

Abstract

Environmental issues have gradually become the focus of public attention. With the increase of consumers’ awareness in environmental protection, the green development of supply chain has become the mainstream trend in the foreseeable future. At this point, government subsidy in research and development becomes a non-negligible external factor in the greening of the supply chain. In order to explore the influencing mechanism of government subsidy on the supply chain under different decision situations, this paper initially constructs a model with a leading manufacturer and a subsequent retailer and then explores the optimal decisions under centralized and decentralized decision-making. Furthermore, we simulate and validate the effects of government subsidy policies on the decisions of supply chain participants. The results show that government subsidy has a positive influence on green technology improvements in the supply chain, but the incomplete utilization of government subsidy funds under information asymmetry may significantly reduce the efficiency of policy. Under information asymmetry, the actual revenues of participants will be larger than the profits in information symmetry only when the percentage of misappropriation is relatively low. Additionally, information asymmetry will lead to a decline in social welfare and is more pronounced under centralized decision-making. Finally, we provide managerial and practical insights for the enterprise managers’ decisions.