Green technology outsourcing for agricultural supply chains with government subsidies

Abstract

To promote green agricultural production, the government often provides two types of subsidies: the Green Technology Operation Subsidy (GOS), and the Green Technology Investment Subsidy (GIS). This paper examines the impact of government subsidy policies on a two-tier agricultural supply chain in which the farmer can choose to self-invest in green technologies or outsource them to the service provider. Our results indicate that outsourcing is more conducive to higher green technology inputs than self-directed investment in most cases and can generate higher profits for small-scale farmers; however, as the land scale increases, farmers prefer to invest in green technologies by themselves. In addition, if the farmer decides to self-invest in green technologies, the farmer prefer the GIS (GOS) policy when the land scale is small (large). Further analysis shows that if the farmer decides to outsource green technologies, the farmer’s profit under the two subsidy policies is equal when the land scale is small, while the farmer benefits more from the GOS policy when the land scale is large. Finally, from the perspective of promoting agricultural green production, the GIS policy is always better than the GOS policy, regardless of whether the farmer outsource green technologies.