Investigating strategies of a green closed-loop supply chain for substitutable products under government subsidy

Abstract

ABSTRACT This article describes a two-level green closed-loop supply chain including two competing manufacturers and a common retailer for marketing substitutable products under government sponsorship. The primary aim is to explore how the manufacturers set strategies for better outcomes, how the government intervention affects the optimal results and how to enhance supply chain efficiency. It considers various problem scenarios, namely, centralized, Nash game, and manufacturer-led Stackelberg game. Cost sharing (CS) and revenue sharing under cost sharing (RCS) contracts are executed to expand the greening level and execution of the supply chain. Numerical analyses show that (i) Stackelberg game is profitable for the manufacturers while Nash game is favorable for the retailer and the entire supply chain; (ii) CS contract cannot give a win-win outcome but RCS contract assists with accomplishing it; and (iii) the government subsidy can effectively expand the sales volume by enhancing product’s greening level.