Research On Government Subsidy Strategies For Fresh Produce Supply Chain Considering Public Welfare

Due to the perishable and short life cycle characteristics of fresh products,operating companies need to invest a lot of money to purchase cold chain equipment for preservation and increasing sales.Combined with the uncertainty of market demand,it has exacerbated the difficulties in operating the fresh produce supply chain.The dilemma of "large investment and low profit" often occurs.To this end,the Chinese government actively promotes constructing a public welfare agricultural product market around "guaranteeing supply and stabilizing prices",and local governments invest a certain amount of special financial subsidy funds every year.However,the incentive effects differ due to different subsidy methods in implementing the subsidy policy,subsidy subjects,and subsidy strategies.Moreover,it is difficult to determine the subsidy effect especially considering the influence of financial subsidy budgets,public welfare,and other factors.As a result,considering a supply chain consisting of a fresh supplier(or a producer)and a fresh seller,this thesis comprehensively applies game theory,decision optimization,contract design,government intervention,and numerical simulation.On this basis,this thesis studies the government subsidy strategy of the fresh produce supply chain under the uncertain consumer demand,the impact of key factors on the effectiveness of government intervention policies,and the decision variables of the supply chain system.First,to investigate how government subsidies affect the investment in fresh cold chain investment considering public welfare under the uncertain demand,we construct a game model of decentralized decision-making and centralized decision-making on fresh cold chain preservation investment.We analyzed the impact of the public welfare of the fresh produce supplier on the optimal decision and equilibrium results through the above model.The difference effect of government subsidies for fresh cold chain investment under decentralized decision-making and centralized decision-making are compared and analyzed.On this basis,we designed the “cost-sharing” contract and“revenue-sharing + transfer payment” contract to improve fresh cold chain investment subsidy,and we separately analyzed the impact of these two types of contracts on optimal decision-making.When the fresh supplier strengthen public welfare through expanding supply or providing parity,we found that the government appropriate strengthening of public welfare can improve the overall social welfare and maintain the subsidy strategy effective.However,when the public welfare is over strengthened,the supply chain’s total profit will be negative,and the subsidy strategy cannot be implemented.The improvement effect of government subsidy on the overall social welfare under centralized decision-making is stronger than that under decentralized decision-making.While the profit of the supply chain is significantly affected by public welfare,the subsidy strategy is easy to fail.The cost-sharing contract can effectively expand the execution range of public welfare,increase the market supply of fresh products,improve the cold chain’s freshness-keeping investment,and achieve a Pareto improvement in the overall welfare of society.Besides,the combined contract can make the decentralized decision-making perfect coordination under certain conditions.Second,for the question of how the government chooses the proper object to subsidize the fresh produce supply chain when consider the impact of public welfare in an environment of uncertain demand,we have constructed the game models of non-government,supplier,seller,and consumer subsidies,respectively.Through a comparative analysis of the above three subsidy strategies,we obtained the government′s optimal subsidy strategy.We also explored the impact of the fresh seller’s public welfare on the subsidy strategy and the optimal supply chain’s decision-making.At the end of this chapter,a numerical example is provided to further analyze the effect of public welfare on the relative advantage of different subsidy strategies.The result indicates that when the fresh seller strengthen public welfare through providing parity or low-profit sales,this will have a different promotion effect on the profitability of each participant of the supply chain,which in turn affects the government’s subsidy strategy choice.Moreover,when the unit subsidy is low,the government subsidizing supplier is most effective in improving the overall social welfare.By contrast,when the unit subsidy is high,the effect of subsidy to seller and consumers to improve the overall social welfare is most significant,and the two incentive effects are the same.Finally,public welfare is negatively related with the leverage ratio of subsidy funds,and over enhancing the public welfare of fresh seller will reduce the efficiency of subsidy funds.Third,considering the impact of the financial capital constraints in an environment of uncertain demand,we study how the government chooses the proper subsidy strategy for the fresh seller.We construct the game models in three cases in this study:non-government subsidy,purchase subsidy,and sales subsidy.First,we examined the impact of financial subsidy funds on the effectiveness of purchase subsidy and sales subsidy strategies.Through comparative analysis,we obtained the government’s optimal subsidy strategy.The influence of subsidy strategy on the optimal decision of the fresh supply chain is also discussed.Finally,we provide numerical examples to illustrate further the influence of different subsidy strategies on different types of fresh products.Our results show that the choice of subsidy strategies is closely related to the financial budget.When the government’s financial budget is abundant,both two subsidy strategies are effective and feasible,which can stabilize prices,increase supply,and stimulate demand.From the perspective of improving the overall social welfare,the purchase subsidy is the optimal strategy for the government,and the sales subsidy is the optimal strategy in terms of subsidy capital efficiency.When the financial budget is insufficient for purchase subsidy but ample for sales subsidy,the government should adopt sales subsidy,which can effectively improve consumer surplus and the overall social welfare.When the financial budget is insufficient,the government should not provide any subsidy,and the optimal strategy is not to interfere with the market operation.Finally,this thesis studied which subsidy strategy the government should choose to effectively intervene the supplier for developing the primary processing in producing areas.Considering the impact of the policy combination under uncertain demand,we explore how the government selects the proper subsidy strategy for the fresh producer.Four game models of different scenarios have been separately constructed: no government intervention,value-added tax(VAT)reduction,production cost subsidy,and VAT reduction plus production cost subsidy for manufacturers.Firstly,we examine the impact of the value-added tax rate on the value-added tax payable and the income of each participant.Secondly,from the perspective of improving the overall social welfare,we studied the government’s optimal intervention strategy and analyzed the impact of different intervention strategies on the equilibrium decision-making of the fresh produce supply chain.We found that when the government implements the VAT policy,the total tax increases first and then decreases with the tax rate increasing,and the negative impact of raising the tax rate on the income of each participant of the supply chain will be gradually strengthened from the production-end to the consumption-end.With the cost consideration of government intervention,as the unit subsidy rate increases,the government’s optimal intervention strategy is followed by combination strategy,production cost subsidy strategy,and VAT reduction strategy.All three strategies can effectively stabilize prices,expand supply,improve freshness,enhance the profitability of producer and seller,and increase taxation capabilities.