Low‐carbon supplier selection in the presence of government subsidy

Given that the impact of consumers' environmental awareness and government subsidies on retailer sourcing has not been adequately examined in previous research, our study examines the impact of government subsidies on a retailer's low‐carbon sourcing strategies. We define a parameter that characterizes the efficiency of government subsidies and build a game theoretical model that includes an ordinary supplier, a low‐carbon supplier, and a retailer. The retailer's sourcing strategies include three options: only ordinary products (O), only low‐carbon products (L), and both ordinary and low‐carbon products (D). Our analysis shows the following results: First, when the retailer's environmental awareness exceeds a certain threshold, the retailer sources either low‐carbon products or a combination of ordinary and low‐carbon products. Otherwise, the retailer sources both ordinary and low‐carbon products. Second, when the retailer's environmental awareness is relatively high, the government adopts a nonsubsidy policy regardless of the product's abatement level. However, when the retailer's environmental awareness is relatively low, the government's policy depends on the abatement level of the product: It provides a subsidy if the abatement level is low and no subsidy if the abatement level is high. Third, government subsidies to the retailer are not always an effective means of increasing social welfare. Our results have important implications for the design of effective government subsidy policies.

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Publication Details

Journal
Managerial and Decision Economics
Published
2024-09-04
DOI
https://doi.org/10.1002/mde.4368
Citations
1
Primary Topic
Sustainable Supply Chain Management
Type
article
Field-Weighted Citation Impact
0.55

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article

Low‐carbon supplier selection in the presence of government subsidy

Yang Hui, Yang Xia, Huang Hongfu, Yu Qingling et al.
1 citations
Managerial and Decision Economics
Sustainable Supply Chain Management
0.55
article

Low‐carbon supplier selection in the presence of government subsidy

Yang Hui, Yang Xia, Huang Hongfu, Yu Qingling, Zhu Siyuan
article en
1 citations

Abstract

Given that the impact of consumers' environmental awareness and government subsidies on retailer sourcing has not been adequately examined in previous research, our study examines the impact of government subsidies on a retailer's low‐carbon sourcing strategies. We define a parameter that characterizes the efficiency of government subsidies and build a game theoretical model that includes an ordinary supplier, a low‐carbon supplier, and a retailer. The retailer's sourcing strategies include three options: only ordinary products (O), only low‐carbon products (L), and both ordinary and low‐carbon products (D). Our analysis shows the following results: First, when the retailer's environmental awareness exceeds a certain threshold, the retailer sources either low‐carbon products or a combination of ordinary and low‐carbon products. Otherwise, the retailer sources both ordinary and low‐carbon products. Second, when the retailer's environmental awareness is relatively high, the government adopts a nonsubsidy policy regardless of the product's abatement level. However, when the retailer's environmental awareness is relatively low, the government's policy depends on the abatement level of the product: It provides a subsidy if the abatement level is low and no subsidy if the abatement level is high. Third, government subsidies to the retailer are not always an effective means of increasing social welfare. Our results have important implications for the design of effective government subsidy policies.

Managerial and Decision EconomicsVol. 46(1)
Jiangsu University (CN), Nanjing University of Science and Technology (CN)
National Natural Science Foundation of China, National Social Science Fund of China
Openalex Percentile: Top 22%
Sustainable Supply Chain Management
0.55
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