Effect of Optimal Subsidy Rate and Strategic Behaviour of Supply Chain Members under Competition on Green Product Retailing

This paper investigates the impact of subsidy and horizontal strategic cooperation on a green supply chain where two competing manufacturers distribute substitutable products through exclusive retailers. Models are formulated in three-stage game structures five different scenarios, government organization determines optimal by pursuing social welfare maximization. Both invest improving quality levels products. The study aims to explore advantage vertical integration collusion from perspective practice presence subsidy. key contributions present indicate that under competition, members both chains able receive higher profits collusion, but product remain suboptimal. If upstream cooperate, does not necessarily improve level, amount expenditure increased substantially. By comparing outcomes vertically integrated with scenarios make we found former might outperform later. Cross-price sensitivity appears as significant parameter affecting members’ performance expenditure. Cooperation between at level is more robust measure than if consumers highly price-sensitive.