Policy Impact Of Customer Green Consumer Behavior And Price Subsidies For The Supply Chain Of Production

China has developed and implemented a number of policies related toproducer responsibility, which make a large number of manufacturers tend tofocus on the production and the development of environmentally friendlyproduct. An increasing number of customers are conscious about theenvironmental impact of product and turn to purchase more environmentallyfriendly green products. It is those customers’ demand for green products thatprovides new market opportunities for manufacturers. In order to expanddomestic demand, promote energy conservation and the governance of airpollution, Chinese government offers consumers purchasing green productsappropriate price subsidies, which provides the impetus for manufacturers’green production to some extent. Therefore, considering conjointly thegovernment’s subsidy policy and the green consuming behavior in green groups,this paper studies the production and pricing strategy in the context of supplychain through the use of optimization theory, Stackelberg game theory andutility theory. This article also notes that the state’s subsidy policy is in favor ofthe overall profit of the supply chain manufacturing green products, and designsrevenue sharing mechanism by utilizing the generalized Nash bargaining gameto coordinate the profit between manufacturer and retailer in the case of greenproduction.Conclusions of this paper can give certain managerial implications tomanufacturers in terms of selecting production strategy, and also provideadvices to the government on how and when to implement the subsidy policy.When there are large quantities of green consumers in the entire market,manufacturers should choose the strategy of producing green products, eventhere is no state subsidies exist. Meanwhile，increased wholesale price is neededto compensate for the production cost of green products. If the number of greenconsumer is low, the manufacturer’s optimal production strategy is to carry outordinary products. When the manufacturer is not willing to produce greenproducts, the government can offer customers purchasing green products somesubsidies to raise the market demand for green products, which can increase themanufacturer’s willingness to produce green products. The quality level ofenvironmental attribute in green product is improved based on the country’s subsidy policy, so the government’s subsidy policy is beneficial to reduceenvironmental contamination caused by product. This article points out that thegovernment can set a minimum price subsidy to guarantee that the profit ofmanufacturer in the case of producing green product is not less than that in thecase of common production. The paper designs coordination mechanisms interms of revenue sharing contract though the generalized Nash bargaining game.According to the bargaining powers between manufacturer and retailer, they canshare the increased revenue in the case of production of green products. As aresult, even if the quantities of the customer in green groups is less or none,green manufacturing strategies can become manufacturer’s and retailer’sequilibrium strategies based on the minimum government subsidy.Several findings also can be concluded by analyzing relevant parametersin this article. If the green consumer has high preference for green products, themanufacturer’s willingness on the production of green product is large.However, manufacturers’ enthusiasm for producing green products becomes lowwhen production costs of green product and green products cost coefficient inquality improvement on environmental attributes increase. When the greenconsumer has high preference for green products, the government should reducethe amount of price subsidy. While, when production costs of green product andgreen products cost coefficient in quality improvement on environmentalattributes increase, the government should raise the price subsidy.