Emission abatement in low-carbon supply chains with government subsidy and information asymmetry

Abstract

Governmental subsidy policy and channel information structure have substantial effects on supply chain emission reduction, operations and marketing decisions. In this paper, we use game theory to study the interplay of government subsidizing arrangement and information asymmetry on manufacturers' emission reduction and retailers' low-carbon promotion. Suppose realistically that the investment coefficients for manufacturers' emission reduction levels and retailer' low-carbon promotion levels are their respective private information. Among diverse governmental subsidy schemes, we find dual subsidizing are the best choice for the defined level of total subsidy under information asymmetry, while it is not always the best choice if the total subsidy level is uncertain. Under information asymmetry, the results show that manufacturer have no incentive to lie under any subsidy policy. However, the retailer has incentive to misrepresent individual information and its misreporting behaviour is related to the coefficient and allocation ratio of governmental subsidies. On this basis, we illustrate that a screening model can be deployed to reduce the negative effects of information asymmetry on supply chain operations. We therefore propose the method of improving the performance of low-carbon supply chains under various situations of information asymmetry and governmental subsidizing schemes to achieve system-wide Pareto improvement.

KEYWORDS:

• Low-carbon supply chain
• governmental subsidising schemes
• information asymmetry
• emission reduction
• carbon-efficient promotion

Acknowledgements

The authors thank much the editors and anonymous reviewers for their constructive comments and suggestions that have helpfully improved the study. This work is partially supported by National Natural Science Foundation of China (NSFC) Grants (Nos. 92167206, 72091214, 91646118, 72132007) and The Science & Technology Pillar Key Program of Tianjin Key Research and Development Plan (20YFZCGX00640).

Disclosure statement

No potential conflict of interest was reported by the author(s).

Data availability statement

The authors confirm that the data supporting the findings of this study are available within the article.

Correction Statement

This article has been corrected with minor changes. These changes do not impact the academic content of the article.

Additional information

Notes on contributors

Longfei He

Longfei He is a professor at the College of Management and Economics, Tianjin University, China. His research interests include Supply chain management, Sustainable operations, and Intelligent manufacturing.

Huanhuan Wang

Huanhuan Wang has been a master’s student at the College of Management and Economics, Tianjin University, China. Her research interest is Sustainable operations management.

Fangtong Liu

Fangtong Liu is a doctoral student at the College of Management and Economics, Tianjin University, China. Her research interest is Operations and supply chain management.