An Equilibrium Pricing Policy In An Industrial Eco-chain Under Government Subsidy

It is a feasible approach to achieve substituting the raw materials for the industrial wastes by exchanging of by-product between two enterprises connected by resource supply and demand. In addition, it’s also a significant research branch of optimization decision in industrial ecology chain. At present, the government is leading actively the manufacture factories to make good use of reprocessing and of recycled resources by green regulations, financial subsidies and so on, which is convinced of affecting directly the core members’ pricing decision in industrial ecology chain. Comparing the pricing policy in industrial ecology chain with general supply chain, the by-product exchange is the connection of core enterprises and the pricing decision of main product depends on that of by-product. Therefore, it has great theoretical and practical value to studyThe government subsidy is introduced as a decision factors to the decision model of supply chain in his thesis. Then we study the action mechanism between government policy and the pricing decision of core firms by using the optimization theory and game theory. For the situation of certain demand, a three stages sequential game model among government and core enterprises is built to study the strategies of equilibrium pricing of industrial chain when government provide the financial subsidy. By using the backward induction, the equilibrium solutions of model are obtained and the effect that the government policy have on the pricing of by-product and main product is also analyzed. Eventually, verifying the model and conclusions by numerical analysis. Then for the situation of random demand, a three stages sequential game model among government and core enterprises is also built to study the strategies of equilibrium pricing of industrial chain when government provide the financial subsidy under the situation of matching and mismatching of by-product supply and demand.The results show that government subsidy not only can promote the profit –level of joint enterprises of industrial ecology chain, but also can improve the social total welfare. Therefore, it is effectively that government guide the development of industrial ecology chain. However, for the problem of matching of by-product supply and demand, in order to effectively interpose the price of by-product and then remission the interest conflict of firms, the government needs to formulate matching subsidies.