Inclusive growth: peer-based poverty alleviation supply chain with tax exemption policy

Prior research on poverty alleviation (PA) supply chains has mainly focused on vertical efforts by downstream or upstream firms to implement PA strategies, overlooking the impact of peer-based or horizontal PA strategies. Furthermore, the tax exemption policy for poor farmers poses a tradeoff between growth and equity. Thus, we explore how peer-based assistance from normal farmers in selling products of poor farmers interacts with the government’s tax exemption policy to influence supply chain performance. Four supply chain scenarios are examined, considering the effects of sales channel assistance and the tax exemption policy for normal farmers, poor farmers with cost disadvantages, and retailers. We analyze the influence of cost disadvantages, product tax rates, and competition intensity on supply chain equilibrium. Additionally, we explore the compatibility of each participant’s preference for sales channel assistance and tax exemption. Our findings indicate that combining sales channel assistance and tax exemption policies can effectively increase the profit of poor farmers and generate amplifying effects (i.e., 1 + 1 > 2). Only through this joint implementation, and with a tax exemption rate exceeding a certain threshold, can all supply chain participants achieve a Pareto improvement; otherwise, some will incur losses. Furthermore, the tax exemption policy is not a zero-sum fiscal transfer; it can incentivize supply chain profit growth and enhance social welfare under specific conditions.