Governmental subsidy policies and supply chain decisions with carbon emission limit and consumer’s environmental awareness

¹ College of Transport and Communications, Shanghai Maritime University, 201306 Shanghai, PR China
² School of Economics and Management, Shanghai Maritime University, 201306 Shanghai, PR China
³ Western China Economic Research Center, Southwest University of Finance and Economics, 611130 Chengdu, Sichuan

^* Corresponding author: cxwang18@aliyun.com

Received: 3 January 2017
Accepted: 20 October 2018

Abstract

The carbon emission reduction has become an inevitable trend. Under the low-carbon environment, the government has been acting as an important role in the operation and management of supply chain. This paper considers four different governmental subsidy strategies, which includes none of members is subsidized (NS Scenario), only retailer is subsidized (RS Scenario), only manufacturer is subsidized (MS Scenario) and both members are subsidized (SS Scenario). A Stackelberg game model, which incorporates both governmental regulation and consumer’s awareness of carbon emission, is developed to present the pricing and emission reduction behaviors for the supply chain members as well as the subsidy policies of government under different governmental subsidy strategies, and analyze the impact of relevant coefficients on the decisions and supply chain profits. It can be concluded that subsidizing to both members is more profitable for supply chain members and government in terms of environment protection and economic development. The results provide some managerial insights for the decision-makers and policy-makers to implement sustainability initiatives.