Green Supply Chain Decision-Making considering Retailer’s Fairness Concerns and Government Subsidy Policy

Abstract

Government’s green subsidy and retailer’s fairness concerns have great implications for enterprise’s operation strategy in the green supply chain (GSC). With the continuous deepening of retailer’s participation in supply chain management, the green services they provided by retailer have become a crucial role in promoting the terminal sales of green products. To further research the government subsidies and retailer’s fairness concerns on the optimal decisions of product pricing, green R&D, and service level, we construct four two-stage GSC models: no subsidy and fairness concerns, subsidizes manufacturer without retailer’s fairness concerns, subsidizes manufacturer with retailer’s fairness concerns, and subsidizes all members with retailer’s fairness concerns. The results show that subsidizes to manufacturers has significantly improved supply chain performance and environmental governance, but it exacerbates the unfair distribution of profits among members, and retailers’ fairness concerns drive them to offer lower green service level. With the green demand of consumers being unable to be fully satisfied, the consumer surplus and effectiveness of government environmental governance decrease accordingly. To eliminate the adverse effect caused by unfair distribution of profits, it is necessary to subsidize retailers so as to share their green service costs and increase their share of profits.