Financial Subsidies and their Effects on Environment-Friendly Products Supply in Green Supply Chain

Abstract

The supply of environment-friendly products is an integral part of the green supply chain. Due to such reasons as lack of high-tech and lack of price competitiveness in contrast to traditional products, the manufacturers will not have incentive to produce and supply green products, so the Government should grant financial subsidies to producers which will compensate the profits entitled to them. Through the analysis based on game theory, the article concludes that there is disadvantage in constant subsidy and the variable subsidies will have more positive effects on the supply of environment-friendly products since the subsidy amount varies with the production scale.