Optimal Pricing and Green Product Design Strategies in a Sustainable Supply Chain Considering Government Subsidy and Different Channel Power Structures

Kelei Xue, Guohua Sun, Yuyan Wang and Shuiye Niu
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Kelei Xue: School of Management Science and Engineering, Shandong University of Finance and Economics, Jinan 250014, China
Guohua Sun: School of Management Science and Engineering, Shandong University of Finance and Economics, Jinan 250014, China
Yuyan Wang: School of Management Science and Engineering, Shandong University of Finance and Economics, Jinan 250014, China
Shuiye Niu: School of Innovation and Entrepreneurship, Shandong University, Qingdao 266237, China

Sustainability, 2021, vol. 13, issue 22, 1-26

Abstract: Green product design is a vital measure to support sustainable development in a circular economy era. This paper studies the multi-product pricing and green product design strategies under different supply chain structures and government subsidy strategies. Considering different channel leadership, we establish the centralized ( C ), manufacturer-led ( MS ), and retailer-led ( RS ) supply chain models, respectively. By applying a game-theoretical approach, corresponding equilibrium pricing, green product design, and government subsidy decisions under different supply chain structures are obtained. Through comparison and numerical analysis, we find that: (1) the different subsidy strategies of the government have an important impact on green product development. When the government provides a uniform subsidy strategy, a RS supply chain can bring greener product, more market demands, more profit, and more social welfare; (2) when the government provides a differentiated subsidy strategy, MS and RS supply chain structures can bring greener product and more market demand than the centralized supply chain. They can also bring the same social welfare and the same product to the green design level. However, the MS supply chain structure can bring more profit for the firm; (3) the consumers’ green awareness positively impacts the design and development of green product. Therefore, it is beneficial for the firm to adopt reasonable measures to boost the environmental awareness of consumers in order to realize the sustainable development of our society.

Keywords: green product design; multi-product pricing; government subsidy; channel power structures (search for similar items in EconPapers)
JEL-codes: O13 Q Q0 Q2 Q3 Q5 Q56 (search for similar items in EconPapers)
Date: 2021
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (4)

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