Supply chain coordination based on green subsidy

This article examines the coordination challenges within a supply chain comprising a manufacturer and a retailer, operating under the influence of environmental regulation instrument, namely green subsidy. A Stackelberg differential game model is developed to analyse equilibrium functions pertaining to environmental performance, retail pricing, and environmental perception levels in both integrated and decentralised channel settings. A two-part tariff contract is introduced for decentralised supply chain coordination, and a Nash bargaining model is subsequently employed to investigate the allocation of additional profits. Numerical simulations are conducted to assess the impact of the green subsidy coefficient and supply chain environmental standards on steady-state solutions and overall supply chain profit. The main findings underscore the flexible pricing strategies adopted by the supply chain in both integrated and decentralised settings. And the study indicates that the overall performance of the former surpasses that of latter. A two-part tariff contract emerges as a pivotal instrument for achieving effective supply chain coordination. Moreover, green subsidy coefficient exhibits a positive influence on enhancing coordination capability, whereas the supply chain environmental standard acts as a deactivator.