The Impact of Government Subsidies on the Low-Carbon Supply Chain Based on Carbon Emission Reduction Level

Biao Li, Yong Geng, Xiqiang Xia and Dan Qiao
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Biao Li: College of Business, Zhengzhou University, Zhengzhou 450001, China
Yong Geng: College of Environmental Science and Engineering, Shanghai Jiao Tong University, Shanghai 200240, China
Xiqiang Xia: College of Business, Zhengzhou University, Zhengzhou 450001, China
Dan Qiao: College of Business, Zhengzhou University, Zhengzhou 450001, China

IJERPH, 2021, vol. 18, issue 14, 1-19

Abstract: To improve low-carbon technology, the government has shifted its strategy from subsidizing low-carbon products (LCP) to low-carbon technology. To analyze the impact of government subsidies based on carbon emission reduction levels on different entities in the low-carbon supply chain (LCSC), game theory is used to model the provision of government subsidies to low-carbon enterprises and retailers. The main findings of the paper are that a government subsidy strategy based on carbon emission reduction levels can effectively drive low-carbon enterprises to further reduce the carbon emissions. The government’s choice of subsidy has the same effect on the LCP retail price per unit, the sales volume, and the revenue of low-carbon products per unit. When the government subsidizes the retailer, the low-carbon product wholesale price per unit is the highest. That is, low-carbon enterprises use up part of the government subsidies by increasing the wholesale price of low-carbon products. The retail price of low-carbon products per unit is lower than the retail price of low-carbon products in the context of decentralized decision making, but the sales volume and revenue of low-carbon products are greater in the centralized decision-making. The cost–benefit-sharing contract could enable the decentralized decision model to achieve the same level of profit as the centralized decision model.

Keywords: LCSC; government subsidies; carbon emission reduction level; game theory model (search for similar items in EconPapers)
JEL-codes: I I1 I3 Q Q5 (search for similar items in EconPapers)
Date: 2021
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (13)

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