Differential Game Analysis of the Green Innovation Cooperation in Supply Chain under the Background of Dual-Driving

Abstract

Taking government environmental regulation and consumer’s green preference into a unified analytical framework, this study constructed a differential game model. With the joint effect of supplier and manufacturer green innovation efforts on the dynamic change of the product’s green level, it compared and analyzed the long-term dynamic equilibrium strategies of green innovation cooperation in a supply chain under decentralized and centralized decision-making situations. Accordingly, a scientific and reasonable profit-distribution contract was then proposed. On this basis, it further carried out a numerical simulation analysis on the dual-driving effects of the government and market. The results showed that the scientific and reasonable profit-distribution contract under the centralized decision-making situation, which was designed by using the Rubinstein bargaining game model, could effectively ensure that the supply chain members’ sharing profits would realize "Dual Pareto Improvements." With the increase of the environmental regulation’s intensity, the product’s green level kept rising and tended to be stable. However, the overall equilibrium profit of the supply chain was characterized by "U" fluctuation, which first descended and then ascended. In addition, the product’s green level, the green innovation investment and equilibrium (distributed) profits of supply chain members, and the overall profits of supply chain all increased with the consumers’ green preference.