government intervention

Governments today are increasingly focused on managing environmental and economic challenges to safeguard the environment. Consequently, companies are striving to remain competitive in society. This paper introduces a revenue-sharing agreement between the retailer and the manufacturer. The contract is designed to alleviate the research and development costs incurred by the manufacturer in greening their products. Additionally, the paper incorporates consumer surplus as a consideration for the social dimension, which is a key pillar of sustainability.

Government interventions in this paper are modeled as subsidies that influence the final price of the product. Notably, this study, for the first time, integrates all three dimensions of sustainability—social, economic, and environmental—within a game-theoretic framework that includes government intervention and a revenue-sharing agreement between the retailer and the manufacturer.

The modeling results demonstrated that incorporating consumer surplus enhances the profitability of both the government and the manufacturer. Although consumer surplus reduces wholesale prices and revenue-sharing proportions, it leads to increased product sales. This boosts the benefits for consumers and members of the supply chain, contributing to improved greenness and higher levels of product sustainability. Consumers show a preference for purchasing products with greater environmental benefits; however, higher levels of greenness require increased production costs. Manufacturers can boost their sales through research and development efforts and by raising public awareness about green products. As a result, manufacturers, retailers, and the government adjust prices and subsidies to maximize their respective profits, altering the overall profitability of the supply chain. The findings highlight that social welfare is a crucial consideration in supply chains, as it significantly enhances the profitability of chain members and promotes higher levels of green production.

Originality/Value: 

This paper is the first to examine all dimensions of sustainability—social, economic, and environmental—within a theoretical framework that incorporates government intervention and the impact of consumer surplus on pricing policies and the greening of products. The scientific contribution of this research lies in providing new insights to managers and policymakers to enhance strategic decision-making aimed at improving sustainability and social welfare within green supply chains.

This study examines the pricing and product greenness level determining policies in two competing supply chains. Each supply chain consists of one manufacturer and one retailer, in which the manufacturer produces a green product, and the retailer delivers it to the end consumer. The manufactured products in supply chains are substitutable. This problem is considered in two scenarios: either the manufacturer or the retailer leads the market. In both cases, the government, as a powerful party, can affect the market by establishing a subsidy/punishment system. This system sets a threshold for the product greenness level and punishes or supports the manufacturer accordingly. In this research, we present the manufacturer and retailer profit functions, taking advantage of wholesale and retail prices, the amount of subsidy and punishment, and demand functions. Next, we use a game-theoretic approach to provide the equilibrium wholesale and retail prices and the equilibrium greenness levels. Numerical results show that the retailer-Stackelberg structure provides better conditions for the supply chain members and the environment, and it is even more highlighted with the competition intensity between the members.

Nowadays, policymakers, organizations, businesses and even ordinary people are concerned about the environment and related issues. Considering environmental issues has led to complexity in supply chains; in recent years, green supply chains have received more and more attention from policy makers, academics, and scientists. Businesses consider environmental issues in their supply chains for a variety of reasons, including government pressure, popular demand, wanting to increase their market share, and attracting new customers. The present study considers a supply chain consisting of one manufacturer and two retailers. The manufacturer produces two products, one green and the other nongreen. Based on its policies and to protect the environment, the government imposes a tax on the nongreen product. We discuss pricing and greening policies for the manufacturer in a green and nongreen supply chain. Game theory is utilized to derive optimal pricing policies for the manufacturer and retailers and the optimal green level of the green product for the manufacturer in both the centralized and decentralized models. The effects of government intervention in the supply chain are also investigated. Finally, numerical examples and sensitivity analyses are presented. The results show that there are unique optimal retail prices for retailers, unique optimal wholesale price, and an optimal green level for the manufacturer in the decentralized model. Also, there are unique optimal retail prices and an optimal green level for the supply chain in the centralized model. The findings also show that the supply chain members' profits are highly dependent on the values of some model parameters, such as demand price elasticity, the cost coefficient of the green degree per unit, and the tax imposed by the government. The results also show that the government can increase or decrease the green level of the green product by changing the amount of the tax and different government policies have significant impacts on the profit of the supply chain members as well as on the environment.