Supply chain green innovation subsidy strategy considering consumer heterogeneity

Abstract

Green innovation is the primary determinant of green supply chain development. To encourage enterprises of the supply chain to consciously execute green innovation, the government often adopts targeted innovation subsidy strategies. In this paper, three types of innovation subsidy scenarios are considered, and, for generality, consumers are categorized as green and non-green, with the following conclusions obtained from the game analysis. (1) At the supply chain level, the government tends to subsidize the core manufacturer instead of subsidizing both the manufacturer and upstream supplier. (2) When the government subsidizes the manufacturer, the entire supply chain can be stimulated by the internal incentive in the supply chain to implement green innovation, which is conducive to environmental and economic benefits as well as social welfare. (3) As the level of government subsidy for green innovation and the proportion of green consumers increase, the government is more willing to subsidize the manufacturer, which can lead to the improvement of environmental and economic benefits along with social welfare. These findings shed light on why the government is keen on subsidizing the manufacturer at the supply chain level.