Impact of Government Subsidy Strategies on Supply Chains Considering Carbon Emission Reduction and Marketing Efforts

Abstract

This study analyzes the impact of different government subsidies on supply chain members under the low-carbon policy. Using the theory and the Stackelberg game method, we derive the equilibrium decision of diverse government subsidy models on the carbon emission reduction efforts and marketing efforts of supply chain members when manufacturers are dominant. We found that government subsidies positively influenced the carbon emission reduction efforts and marketing efforts of supply chain members and could increase the overall profit of the supply chain and the overall welfare of society. Meanwhile, social welfare increased first and then decreased with the subsidy, and there was a maximum value. Within a certain threshold, when the market demand was sensitive to carbon emission reduction efforts, it was more beneficial to subsidize manufacturers, and when it was sensitive to marketing efforts, subsidizing retailers was more beneficial. Regardless of the subsidy situation, an optimal subsidy rate exists among supply chain members. Meanwhile, adjusting government subsidy measures can decrease the profit gap between supply chain members, and it provides potential possibilities for cooperation among supply chain members.