The impact of government incentive on the two competing supply chains under the perspective of Corporation Social Responsibility: A case study of Photovoltaic industry

Abstract

Strategy Corporation Social Responsibility (CSR) has received a lot of attention lately and is mainly related to environmental protection in a single supply chain under the condition of the constant tax or subsidy imposed by government, this paper studies a price competition model of two environmentally friendly and harmful competing supply chains consisting of one manufacturer and one retailer respectively, adopting two-stage Stackelberg game under the condition of incomplete knowledge. Assume that the manufacturers don't know the retailers' knowledge, but they are aware of the prior probability of retailers about selling which type of product under the decentralized supply chain, and the higher the prior probability is, the more likely manufacturers tend to produce the environmentally friendly PV panels. This paper first quantifies the impact of products on the environment, studies the impact of which on competing supply chains' profit and the tariffs. This paper finds that only the tariffs set by government and the values of the environmental impact satisfy a three-dimensional area, can the firms ensure the stable competitive market. Results of this analysis show that government cannot impose extreme tax or subsidy on firms, and the environmental impact in the centralized supply chains is higher than that in the decentralized supply chains. This paper validates the results through a case of Photovoltaic (PV) industry from the perspective of CSR, and the numerical results show that there are significant impacts of different governmental policy of social responsibility and environment protection on the financial revenue and the profits of the competing supply chains and their members.