Document Type : Research Paper

Authors

• Mohammadtaghi Moharrami ¹
• Mohammad Kazem Sayadi ²
• Meysam Rafei ³

¹ Master of Industrial Engineering, Khwarazmi University, Tehran, Iran

² Assistant Professor, ICT Research Institute, Tehran, Iran

³ Assistant Professor, Department of Economics, Kharazmi University, Tehran, Iran.

Abstract

Nowadays, due to the pollution that businesses and various industries impose to the environment, the adoption of strategies and policies by governments to improve the environmental performance of the supply chain has received more attention. The green supply chain will have many benefits, such as saving energy resources, reducing pollutants, and so on. Government intervention to develop these chains takes various forms, such as subsidies, taxes, licensing, and advertising. In this study, two manufacturers with green and non-green supply chains compete in a competitive market and sell their products through a joint retailer, and the government intervenes as a leader in the Stackelberg game. These chains are designed based on the selection of agent-based pricing and wholesale pricing methods in four different models. In these models, the government advertises for green products in the first and second models and imposes taxes on the producer of non-green products in the third and fourth models, seeking to maximize social welfare and improving the environment. In order to analyze and compare the models, the game theory approach was used. The results show that in general, government intervention improves the environmental situation and social welfare, and in the case of advertising has a better effect on the overall market trend and also on social welfare than the tax imposing strategy.
Introduction
Today, with the rapid growth of industries worldwide, the environmental impact and ecological effects of products have become significant concerns. There is a growing awareness of the environmental consequences and associated risks to human health resulting from industrial activities. Consequently, research on green supply chain management has seen a significant increase. As public awareness about environmental issues continues to rise and concerns about the future of our planet intensify, customers are increasingly inclined to purchase environmentally friendly products. This shift in consumer behavior has prompted manufacturers and businesses to reassess their production processes and adapt to changing customer preferences and new government policies. The primary objective of this research is to investigate the role of government intervention in influencing the demand for green and non-green products through factor-oriented green and non-green supply chains. Additionally, the study aims to identify government policies that can facilitate the development and adoption of green products. The findings of this research can be utilized by governments to promote the use of environmentally friendly goods and enhance environmental protection efforts.
Materials and methods
The approach of this research involves modeling and analysis. The research considers multiple models, each consisting of two supply chains with two manufacturers and a common retailer. One manufacturer produces a green product (environmentally friendly), while the other produces a non-green product (not environmentally friendly). Throughout the research, all comparative models adhere to this structure, with the first supply chain focusing on the production of green products and the second supply chain delivering non-green products to customers. All the analyses conducted in this research are mathematically analyzed and utilize game theory to validate the model results and analyze them. Since the model results are mathematically proven, there is no need to collect real-world data. Instead, hypothetical data are used in the examples to illustrate the various aspects of the problem. In this research, all the models are designed based on the Stackelberg game, and the government takes the initiative in determining its objectives.
Results
In order to compare the models and analyze the results, we first considered a fixed strategy (advertisement or taxation) for the government. This allowed us to investigate the effect of pricing type on profit, demand, and social welfare. We compared the first model with the second model and also compared the third and fourth models together. Furthermore, we compared the advertising strategy models with the taxation strategy models, examining each strategy within the supply chains. The results indicate that the second model generates the highest level of social welfare and benefits for society, while also resulting in the greatest profit for producers and retailers. Following that, the first model exhibits more social welfare compared to the third and fourth models. Additionally, the profit of the green product producer in the first model significantly surpasses that of the non-green product producer. This difference in profitability serves as an incentive for producers to transition to green product production. Although the profit disparity between producers in the third and fourth models is more substantial and encourages the greater promotion of green product production, it leads to lower satisfaction and well-being.
Conclusions
The results demonstrate the high sensitivity of producers' and retailers' profits to the pricing of their products. The product price is influenced by factors such as whether the supply chain is factor-oriented or wholesale, as well as the type of government intervention. When consumers make purchasing decisions, they consider not only the price but also other parameters, such as the environmental friendliness of the product. In other words, the choice of a product is determined by a set of conditions and is not solely dependent on price fluctuations. The pricing method, whether factor-oriented or wholesale, significantly impacts the profitability of supply chain members and has implications for social welfare and environmental improvement. Different types of government intervention, such as cultural initiatives or taxation, can also lead to changes in the results

Keywords

• Green supply chain
• Non-Green Supply Chain
• Government intervention
• Social welfare
• Agent-Based Pricing