How Does Green Store Brand Introduction Influence the Effects of Government Subsidy on Supply Chain Performance?

Abstract

With the rising awareness of environmental protection and concern for sustainable development, green products have been highly favored by consumers, enterprises, and the government. As a matter of fact, not only do manufacturers produce green products, but retailers would also like to introduce their green store brands. However, the costly green investment hinders the improvement of the products’ green degree. Therefore, the government may provide financial support to motivate enterprises to increase their products’ green degree. This study investigates how the presence of green store brands and government subsidies affect green supply chain performance. Four models are discussed using the Stackelberg game theoretic approach, and then, the optimal solutions in different cases are compared. The results show that (1) regardless of the government subsidy, the green store brand introduction always reduces the manufacturer’s profit and improves the retailer’s profit and environmental benefit; (2) In most cases, the implementation of a government subsidy can effectively improve the products’ green degree and benefit the supply chain members. However, it is surprising to find that the government subsidy may be detrimental to the manufacturer once the green store brand is introduced; (3) Interestingly, the introduction of green store brand may have an expansion effect, a shrinkage effect or even an inverse effect on the effects of government subsidies on supply chain performance, and these effects become more significant with the increasing green preference of consumers, product substitute, and subsidy rate. The new findings also provide some implications for supply chain members and the government in green supply chain management (GSCM) and green innovation.