Abstract
The development of the organic food industry is of great significance to the environment and society as consumers increasingly prefer green and healthy food. However, certain production and investment problems must be solved. A tripartite game model is established in this study to investigate the labeling and advertising investment decisions in an organic food supply chain composed of one supplier and two heterogeneous manufacturers by the biform game approach. In addition, a subsidy mechanism is introduced to alleviate underinvestment. The results show that, first, the supplier will label if labeling cost is relatively low without considering advertising investment. Second, the supplier will not label if advertising investment is considered because of the “diffusion of responsibility” mentality, and both manufacturers will invest in advertising as a result of equilibrium in dominant strategies. Third, the advertising subsidy mechanism can achieve Pareto improvement and coordinate the supply chain. Finally, manufacturer heterogeneity will lead to differentiated subsidy strategies that the supplier can claim to give additional subsidies to the weak manufacturer, thereby weakening the “diffusion of responsibility” mentality.
Highlights
Environmental problems attract increasing attention as the economy develops [1]
We study the decisions of supplier and manufacturers in the noncooperative stage and pro t allocation in the cooperative stage in an organic food supply chain
In the face of consumers’ preference for organic food and the government’s low-carbon policy, we establish a tripartite game model to study the decisions of labeling and advertising investment in an organic food supply chain composed of one supplier and two heterogeneous manufacturers by the biform game approach
Summary
Environmental problems attract increasing attention as the economy develops [1]. the quality of food is declining [2], and the harmfulness of unhealthy food is gradually increasing [3]. Is study has the following key contributions to the existing literature on competition and cooperation in organic food supply chains It provides optimal strategies in labeling and advertising investment with consideration of manufacturer heterogeneity and consumer green preference. It presents interesting and unique explanations for several phenomena It verifies the existence of underinvestment and introduces a further coordination program, namely, the advertising subsidy mechanism, to alleviate the problem and achieve the Pareto improvement to coordinate organic food supply chains. It offers reasonable suggestions on the supplier’s subsidy and manufacturers’ advertising investment.
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