Intervention of Government in the Competition between Green and Non-Green Supply Chains

Document Type : Research Paper


1 Associate Prof., Faculty of Industrial Engineering, Alzahra University, Tehran, Iran

2 Ph.D. Student in Industrial Engineering, Faculty of Industrial Engineering, Alzahra University, Tehran, Iran


Objective: The environment and the related issues are among the most up-to-date topics and concerns of policymakers, businesses and even ordinary people. Managers often look for environmental issues in the supply chain of their businesses for a variety of reasons, including governmental pressures, peoples’ demands, increasing their market share and etc. In this paper, two types of three-tier green and non-green supply chain including suppliers, manufacturers and retailers are considered with regard to the government intervention in the amount and price of green and non-green products.
Methods: In this research, the role of government as a leader is examined in the form of a nonlinear programming model considering four-level constraints to reduce the economic and environmental costs and increase the social welfare index by setting tariffs for both chains based on Stackelberg game. It is conducted in a fashion that, at first, the tariffs are set by the government (supply chains with green products will receive subsides otherwise they will be fined), and then the price and quantity of the products are determined by the retailer, manufacturer and supplier according to those tariffs.
Results: Finally, numerical examples are presented to illustrate the model and the sensitivity analysis of the importance of the role of the government for each of its goals and its impact on profits and tariffs imposed on supply chain has been examined.
Conclusion: The results showed that the profits of the supply chain members are significantly dependent on tariffs set by the government. The best balance between reducing economic and environmental costs and increasing the welfare of customers is obtained when the government attaches the same importance to all of them; this means that it can meet all three goals alike as much as possible.


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