Trade-off between economic, environmental and social objectives in pesticide supply chains

Abstract

ABSTRACT Biopesticides are considered as the effective measure to combat environmental consequences brought by chemical pesticides. However, due to the comparatively high price of biopesticides and unreasonable government subsidies, the trade-off between economy, society and environment represents a daunting task for pesticide supply chains. This study establishes a pesticide supply chain including manufacturers, retailer and government to study the production and sales strategies of pesticides under two different structures: monopoly and duopoly. Based on the equilibrium and numerical analyses, we find that: first, only when the government subsidy falls within a reasonable range, it can incentivise the chemical pesticide manufacturer to produce biopesticides in both monopoly and duopoly markets. Interestingly, the subsidy can improve the profit of pesticide supply chain in monopoly market, however the consumer surplus and social welfare are greater in duopoly market with the increase of subsidy. Second, the profit of pesticide supply chain is better after launching biopesticide and the retailer gains more profits in duopoly market than in monopoly market with the increase of farmer’s biopesticide acceptance. Third, the launch of biopesticides can decrease the influence of environment pollution in both market structures, and less environmental impact in monopoly market.