IDEAS home Printed from https://ideas.repec.org/a/gam/jsusta/v13y2021i24p13514-d696832.html
   My bibliography  Save this article

Optimal Green Operation and Information Leakage Decisions under Government Subsidy and Supply Uncertainty

Author

Listed:
  • Junjian Wu

    (Research Center of the Central China for Economic and Social Development, Nanchang University, Nanchang 330031, China
    School of Economics and Management, Nanchang University, Nanchang 330031, China)

  • Jennifer Shang

    (Katz Graduate School of Business, University of Pittsburgh, Pittsburgh, PA 15260, USA)

Abstract

This study investigated optimal green operation and information leakage decisions in a green supply chain system. The system consists of one supplier, one leader retailer 1, one follower retailer 2, and the government. In this system, the government subsidizes each retailer based on the selling price of the product. The supplier is subject to a yield uncertainty process. The suppler decides whether to leak leader retailer 1′s order quantity to follower retailer 2 or not. In this study, we first built a Stackelberg game to address the equilibrium green operation decisions, when the supplier has and has not information leakage behavior, respectively. Subsequently, we identify the supplier’s information leakage equilibrium and how such behavior affects retailers’ ex ante profits, consumer surplus, and social welfare through a numerical study. Interestingly, we obtained the following results: (1) Supplier leaks are the unique equilibrium of the supplier. The product’s green degree and wholesale price at supplier’s equilibrium are higher under information leakage than under no information leakage. (2) The supplier’s information leakage behavior is good for leader retailer 1 and bad for follower retailer 2. (3) Information leakage behavior increases both consumer surplus and social welfare under certain conditions. (4) In general, key system parameters (e.g., the subsidy rate, supply uncertainty, supply correlation, and forecast accuracies) positively correlate with consumer surplus and social welfare in the same direction, while they affect retailer 1′s and retailer 2′s ex ante profit in the opposite direction. These findings provide useful insights for businesses to manage demand forecast information and make decisions on the green level of the product in green supply chain management.

Suggested Citation

  • Junjian Wu & Jennifer Shang, 2021. "Optimal Green Operation and Information Leakage Decisions under Government Subsidy and Supply Uncertainty," Sustainability, MDPI, vol. 13(24), pages 1-19, December.
  • Handle: RePEc:gam:jsusta:v:13:y:2021:i:24:p:13514-:d:696832
    as

    Download full text from publisher

    File URL: https://www.mdpi.com/2071-1050/13/24/13514/pdf
    Download Restriction: no

    File URL: https://www.mdpi.com/2071-1050/13/24/13514/
    Download Restriction: no
    ---><---

    References listed on IDEAS

    as
    1. Kenan Arifoglu & Sarang Deo & Seyed M. R. Iravani, 2012. "Consumption Externality and Yield Uncertainty in the Influenza Vaccine Supply Chain: Interventions in Demand and Supply Sides," Management Science, INFORMS, vol. 58(6), pages 1072-1091, June.
    2. Weimin Ma & Ranran Zhang & Shiwei Chai, 2019. "What Drives Green Innovation? A Game Theoretic Analysis of Government Subsidy and Cooperation Contract," Sustainability, MDPI, vol. 11(20), pages 1-24, October.
    3. Jiayi Joey Yu & Christopher S. Tang & Zuo-Jun Max Shen, 2018. "Improving Consumer Welfare and Manufacturer Profit via Government Subsidy Programs: Subsidizing Consumers or Manufacturers?," Manufacturing & Service Operations Management, INFORMS, vol. 20(4), pages 752-766, October.
    4. Tinglong Dai & Soo-Haeng Cho & Fuqiang Zhang, 2016. "Contracting for On-Time Delivery in the U.S. Influenza Vaccine Supply Chain," Manufacturing & Service Operations Management, INFORMS, vol. 18(3), pages 332-346, July.
    5. Lode Li, 2002. "Information Sharing in a Supply Chain with Horizontal Competition," Management Science, INFORMS, vol. 48(9), pages 1196-1212, September.
    6. Xu, Changyan & Wang, Chuanxu & Huang, Rongbing, 2020. "Impacts of horizontal integration on social welfare under the interaction of carbon tax and green subsidies," International Journal of Production Economics, Elsevier, vol. 222(C).
    7. Lu, Jizhou & Feng, Gengzhong & Shum, Stephen & Lai, Kin Keung, 2021. "On the value of information sharing in the presence of information errors," European Journal of Operational Research, Elsevier, vol. 294(3), pages 1139-1152.
    8. Huang, Shuai & Fan, Zhi-Ping & Wang, Ningning, 2020. "Green subsidy modes and pricing strategy in a capital-constrained supply chain," Transportation Research Part E: Logistics and Transportation Review, Elsevier, vol. 136(C).
    9. Chen, Jen-Yi & Dimitrov, Stanko & Pun, Hubert, 2019. "The impact of government subsidy on supply Chains’ sustainability innovation," Omega, Elsevier, vol. 86(C), pages 42-58.
    10. Wang, Jiao & Liu, Zhibing & Zhao, Ruiqing, 2019. "On the interaction between asymmetric demand signal and forecast accuracy information," European Journal of Operational Research, Elsevier, vol. 277(3), pages 857-874.
    11. Bigerna, Simona & Wen, Xingang & Hagspiel, Verena & Kort, Peter M., 2019. "Green electricity investments: Environmental target and the optimal subsidy," European Journal of Operational Research, Elsevier, vol. 279(2), pages 635-644.
    12. Bian, Junsong & Zhang, Guoqing & Zhou, Guanghui, 2020. "Manufacturer vs. Consumer Subsidy with Green Technology Investment and Environmental Concern," European Journal of Operational Research, Elsevier, vol. 287(3), pages 832-843.
    13. Shengzhong Zhang & Yingmin Yu & Qihong Zhu & Chun Martin Qiu & Aixuan Tian, 2020. "Green Innovation Mode under Carbon Tax and Innovation Subsidy: An Evolutionary Game Analysis for Portfolio Policies," Sustainability, MDPI, vol. 12(4), pages 1-22, February.
    14. Shao, Lulu & Yang, Jun & Zhang, Min, 2017. "Subsidy scheme or price discount scheme? Mass adoption of electric vehicles under different market structures," European Journal of Operational Research, Elsevier, vol. 262(3), pages 1181-1195.
    15. Yang, Rui & Tang, Wansheng & Zhang, Jianxiong, 2021. "Technology improvement strategy for green products under competition: The role of government subsidy," European Journal of Operational Research, Elsevier, vol. 289(2), pages 553-568.
    16. Guangwen Kong & Sampath Rajagopalan & Hao Zhang, 2013. "Revenue Sharing and Information Leakage in a Supply Chain," Management Science, INFORMS, vol. 59(3), pages 556-572, November.
    17. Krishnan S. Anand & Manu Goyal, 2009. "Strategic Information Management Under Leakage in a Supply Chain," Management Science, INFORMS, vol. 55(3), pages 438-452, March.
    18. Liping Song & Yingluo Yan & Fengmin Yao, 2020. "Closed-Loop Supply Chain Models Considering Government Subsidy and Corporate Social Responsibility Investment," Sustainability, MDPI, vol. 12(5), pages 1-27, March.
    19. Yina Li & Yang Tong & Fei Ye & Jiajia Song, 2020. "The choice of the government green subsidy scheme: innovation subsidy vs. product subsidy," International Journal of Production Research, Taylor & Francis Journals, vol. 58(16), pages 4932-4946, July.
    20. Yu, Yugang & Han, Xiaoya & Hu, Guiping, 2016. "Optimal production for manufacturers considering consumer environmental awareness and green subsidies," International Journal of Production Economics, Elsevier, vol. 182(C), pages 397-408.
    21. Huang, Weixiang & Zhou, Wenhui & Chen, Jiguang & Chen, Xiaohong, 2019. "The government’s optimal subsidy scheme under Manufacturers’ competition of price and product energy efficiency," Omega, Elsevier, vol. 84(C), pages 70-101.
    Full references (including those not matched with items on IDEAS)

    Citations

    Citations are extracted by the CitEc Project, subscribe to its RSS feed for this item.
    as


    Cited by:

    1. Chaonan Li & Tianyi Guo & Yan Chen, 2022. "Robust Emission Reduction Strategies under Cap-and-Trade and Demand Uncertainty," Sustainability, MDPI, vol. 14(20), pages 1-27, October.

    Most related items

    These are the items that most often cite the same works as this one and are cited by the same works as this one.
    1. Zheng, Shiyuan & Jiang, Changmin & Fu, Xiaowen & Ge, Ying-En & Shu, Jia, 2022. "Subsidies for green technology adoption under uncertain demand and incomplete information," Omega, Elsevier, vol. 112(C).
    2. Junjian Wu & Henry Xu, 2021. "Information Leakage and Financing Decisions in a Supply Chain with Corporate Social Responsibility and Supply Uncertainty," Sustainability, MDPI, vol. 13(21), pages 1-22, October.
    3. Zongyu Mu & Qiujie Li & Gengxin Dai & Ke Li & Guangming Zhang & Fan Zhang, 2022. "Government Subsidy Policy and Online Selling Strategy in a Platform Supply Chain with Green R&D and DDM Activities," Sustainability, MDPI, vol. 14(15), pages 1-23, August.
    4. Fang, Lei & Zhao, Sai, 2023. "On the green subsidies in a differentiated market," International Journal of Production Economics, Elsevier, vol. 257(C).
    5. Li Liu & Zhe Wang & Jiangtao Xu & Zaisheng Zhang, 2023. "Green baton: how government interventions advance green technological innovation," Environment, Development and Sustainability: A Multidisciplinary Approach to the Theory and Practice of Sustainable Development, Springer, vol. 25(10), pages 11121-11152, October.
    6. Ke Li & Gengxin Dai & Yanfei Xia & Zongyu Mu & Guitao Zhang & Yangyan Shi, 2022. "Green Technology Investment with Data-Driven Marketing and Government Subsidy in a Platform Supply Chain," Sustainability, MDPI, vol. 14(7), pages 1-22, March.
    7. Jialu Li & Meiying Yang & Wei Xing & Xuan Zhao, 2018. "Information Acquisition Behavior: An Evolutionary Game Theory Perspective," Dynamic Games and Applications, Springer, vol. 8(2), pages 434-455, June.
    8. Wei-Shiun Chang & Daniel A. Sanchez-Loor, 2020. "Downstream Information Leaking and Information Sharing Between Partially Informed Retailers," Journal of Industry, Competition and Trade, Springer, vol. 20(4), pages 733-760, December.
    9. Fan, Zhi-Ping & Cao, Yue & Huang, Chun-Yong & Li, Yongli, 2020. "Pricing strategies of domestic and imported electric vehicle manufacturers and the design of government subsidy and tariff policies," Transportation Research Part E: Logistics and Transportation Review, Elsevier, vol. 143(C).
    10. Leon Yang Chu & Noam Shamir & Hyoduk Shin, 2017. "Strategic Communication for Capacity Alignment with Pricing in a Supply Chain," Management Science, INFORMS, vol. 63(12), pages 4366-4377, December.
    11. Barbosa, Luciana & Rodrigues, Artur & Sardinha, Alberto, 2022. "Optimal price subsidies under uncertainty," European Journal of Operational Research, Elsevier, vol. 303(1), pages 471-479.
    12. Juan Zhang & Ziyue Wang & Huiju Zhao, 2020. "The Impact of Consumer Subsidy on Green Technology Innovations for Vehicles and Environmental Impact," IJERPH, MDPI, vol. 17(20), pages 1-24, October.
    13. Srivastava, Abhishek & Kumar, Rajeev Ranjan & Chakraborty, Abhishek & Mateen, Arqum & Narayanamurthy, Gopalakrishnan, 2022. "Design and selection of government policies for electric vehicles adoption: A global perspective," Transportation Research Part E: Logistics and Transportation Review, Elsevier, vol. 161(C).
    14. Wang, Fan & Xu, Danni & Zhuo, Xiaopo & Zhang, Chao & Liu, Yaoqi, 2022. "Improving consumer welfare in vaccine market: Pricing, government subsidies and consumer awareness," Transportation Research Part E: Logistics and Transportation Review, Elsevier, vol. 167(C).
    15. Zhao, Meng & Li, Bin & Ren, Jiali & Hao, Zhihua, 2023. "Competition equilibrium of ride-sourcing platforms and optimal government subsidies considering customers’ green preference under peak carbon dioxide emissions," International Journal of Production Economics, Elsevier, vol. 255(C).
    16. Li, Qiu-xiang & Ji, Hui-min & Huang, Yi-min, 2022. "The information leakage strategies of the supply chain under the block chain technology introduction," Omega, Elsevier, vol. 110(C).
    17. Yaoguang Zhong & Ivan Ka Wai Lai & Fangfang Guo & Huajun Tang, 2021. "Research on Government Subsidy Strategies for the Development of Agricultural Products E-Commerce," Agriculture, MDPI, vol. 11(11), pages 1-27, November.
    18. Li Liu & Zhe Wang & Zhao Song & Zaisheng Zhang, 2023. "Evolutionary game analysis on behavioral strategies of four participants in green technology innovation system," Managerial and Decision Economics, John Wiley & Sons, Ltd., vol. 44(2), pages 960-977, March.
    19. Cheng, Fei & Chen, Tong & Chen, Qiao, 2022. "Cost-reducing strategy or emission-reducing strategy? The choice of low-carbon decisions under price threshold subsidy," Transportation Research Part E: Logistics and Transportation Review, Elsevier, vol. 157(C).
    20. Jin, Wei & Ding, Wen & Yang, Jun, 2022. "Impact of financial incentives on green manufacturing: Loan guarantee vs. interest subsidy," European Journal of Operational Research, Elsevier, vol. 300(3), pages 1067-1080.

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:gam:jsusta:v:13:y:2021:i:24:p:13514-:d:696832. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a bibliographic reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: MDPI Indexing Manager (email available below). General contact details of provider: https://www.mdpi.com .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.