Pricing and greening decisions of competitive forward and reverse supply chains under government financial intervention: Iranian motorcycle industry case study

Abstract

The necessity for sustainable development and to support eco-friendly products have manifold the government responsibility in directing green activities. This paper theoretically studies the moderating role of government in pricing and greening decisions of chain-to-chain competition in developing substitutable green products under government involvement in supporting green product distribution and/or recycling through assigning monetary tariffs to customers and practically adjusts a real-world case study of the Iranian motorcycle industry issues. We examine two competitive supply chains (SCs) consisting of one retailer and one manufacturer under two-way logistics, i.e. forward SC that distributes green products and backward SC that collects pollutant products from the market. In addition to maximizing the profit of each SC member and minimizing government expenditure, reductions in environmental pollution are also examined. This study examines the impact of government policies in equilibrium strategies through six scenarios, based on different government elective policies, and using Nash or Stackelberg game structures. A computational analysis of the case study reveals that under more constrained budget situations, the government should resist the urge to reduce recycling tariffs, compared with distribution tariffs. The greatest reduction in environmental pollution is achievable through: government financial support only for recycling with the lowest investment rejection behavior, following a Nash game, reducing greening costs, increasing tendencies towards environmental protection, and increasing the rate of recyclable products. The greatest profit for firms is obtainable through: government financial support of distribution and recycling logistics with the lowest tendency towards environmental protection, following a Nash game, reducing greening costs, reducing the investment rejection behavior of the government, and increasing the rate of recyclable products.