The Impact of Government Intervention and Cap-and-Trade on Green Innovation in Supply Chains: A Social Welfare Perspective

Changhong Li, Jialuo Wang and Yifan Shi
Additional contact information
Changhong Li: School of Economics and Management, Shanxi University, Taiyuan 030006, China
Jialuo Wang: School of Economics and Management, Shanxi University, Taiyuan 030006, China
Yifan Shi: School of Economics and Management, Shanxi University, Taiyuan 030006, China

Sustainability, 2022, vol. 14, issue 13, 1-18

Abstract: This paper discusses the impact of government intervention (greenness threshold limit) and cap-and-trade policy on green investment, stakeholder profits and social welfare under different power structure scenarios in the green supply chain. First, a two-level green supply chain system is constructed: a manufacturer that produces green products and complies with cap-and-trade policies and a retailer that sells green products. Based on the Stackelberg game and Cournot game, we compare the optimal solutions under the government intervention mechanism and cap-and-trade mechanism with manufacturer leadership, retailer leadership and equal power. The results are as follows: (1) both government intervention and the cap-and-trade mechanism are conducive to an increase in green technology innovation and profit, but excessive control will lead to a decline in social welfare. (2) The results in the concentrated scenario were better than those in the dispersed scenario. In the decentralized state, the result of equal power is the best, the result of retailer leadership is next, and the result of manufacturer leadership is the worst. (3) The lower cost of green investment will cause enterprises to give up purchasing carbon emission permits from the carbon market.

Keywords: green technology innovation; social welfare; game-theoretic analysis; cap-and-trade policy; government intervention (search for similar items in EconPapers)
JEL-codes: O13 Q Q0 Q2 Q3 Q5 Q56 (search for similar items in EconPapers)
Date: 2022
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (3)

Downloads: (external link)
https://www.mdpi.com/2071-1050/14/13/7941/pdf (application/pdf)
https://www.mdpi.com/2071-1050/14/13/7941/ (text/html)

Related works:
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:gam:jsusta:v:14:y:2022:i:13:p:7941-:d:851582

Access Statistics for this article

Sustainability is currently edited by Ms. Alexandra Wu

More articles in Sustainability from MDPI
Bibliographic data for series maintained by MDPI Indexing Manager ().