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Abstract
In this paper, we consider the effect of a government's environmental protection policies on green and regular supply chains. The proposed model is founded upon a three-level distributed programming problem where the government as a Stackelberg leader determines subsidy and tax strategies for green and regular supply chains, respectively. By choosing the appropriate subsidy and tax, the government aims to decrease the negative effects of a regular supply chain on the environment and to encourage green production. Each supply chain as a Stackelberg follower consists of one seller and one buyer. The nonlinear bi-level programming problem is first transformed into a single-level programming one by Karush-Kuhn-Tucker conditions, then it is solved by a branch-and-bound method. At the end, we present a numerical example to investigate how the budgetary constraints of the government affect the efficiency of its decisions to reduce the pollution of the products.
Acknowledgements
We would like to thank the referees for their helpful suggestions and insightful comments that have significantly improved the content and presentation of the article. This research is supported by: (i) grant of Islamic Azad University South Tehran branch by Faculty Research Support Fund from the Faculty of Engineering; (ii) research project entitled “Competition of two green and regular supply chains under government financial intervention”.