Impact of government financial intervention on competition among green supply chains

This work analyzes the effects of governmental financial intervention on green supply chain competition using a three-stage game-theoretic model. Nash equilibrium solutions for governmental and chain member decisions are derived. Analytical results suggest that the government should adopt green taxation and subsidization to ensure that green profit attributed to green-product production is non-negative. Strategically, low-wholesale-price strategies are suggested to recycled-component suppliers under green subsidization to stimulate manufacturers' intention of green product production under green taxation. Numerical results reveal that under equilibrium conditions, social welfare and chain-based profits improve by 27.8% and 306.6%, respectively, compared with the case without financial intervention. (C) 2012 Elsevier B.V. All rights reserved.