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A Green Supply-Chain Decision Model for Energy-Saving Products That Accounts for Government Subsidies

Author

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  • Jian Xue

    (School of Economics and Management, Shaanxi University of Science and Technology, Xi’an 710021, China)

  • Ruifeng Gong

    (School of Economics and Management, Shaanxi University of Science and Technology, Xi’an 710021, China
    Business School, Hunan University of Humanities, Science and Technology, Loudi, Hunan 417000, China)

  • Laijun Zhao

    (Sino-US Global Logistics Institute, Shanghai Jiao Tong University,1954 Huashan Rd., Shanghai 200030, China
    Antai College of Economics and Management, Shanghai Jiao Tong University, 1954 Huashan Rd., Shanghai 200030, China)

  • Xiaoqing Ji

    (School of Economics and Management, Shaanxi University of Science and Technology, Xi’an 710021, China)

  • Yan Xu

    (School of Economics and Management, Shaanxi University of Science and Technology, Xi’an 710021, China)

Abstract

Government subsidies are a common policy adopted to promote energy conservation and emission reduction. The decision-making that occurs within the green supply chain for energy-saving products under government subsidies is an area of great academic interest and game theory is becoming a popular tool in such research. In this paper, we examined centralized and decentralized decision-making models for the green supply chain and a coordinated decision-making model for revenue-sharing contracts based on game theory. We studied the effects of government subsidies on retail prices, energy conservation levels, market demand, supply chain profits, and social welfare for energy-saving products. We then compared the effectiveness of the three models using a numerical example. Our results revealed the range of contract parameters for which manufacturer and retailer profits increase. Our results show that government subsidies can significantly improve social welfare and promote the improvement of energy-saving products. Centralized decision-making generates higher profits than decentralized decisions and government subsidies were positively correlated with the level of energy conservation, product prices, and market demand. Revenue sharing contract coordination decisions can coordinate the supply chain and achieve the same effect as centralized decisions.

Suggested Citation

  • Jian Xue & Ruifeng Gong & Laijun Zhao & Xiaoqing Ji & Yan Xu, 2019. "A Green Supply-Chain Decision Model for Energy-Saving Products That Accounts for Government Subsidies," Sustainability, MDPI, vol. 11(8), pages 1-17, April.
    • Handle: RePEc:gam:jsusta:v:11:y:2019:i:8:p:2209-:d:222271
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    References listed on IDEAS

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