Game Analysis Of Brand Manufacturers And Suppliers Considering Different Environmental Subsidies

Since 2004,China’s economy has entered the golden period of development and achieves double-digit economic growth for many years,but it also appeared environmental pollution of the development during the high-speed economic growth.Due to the refinement of social division of labor,environmental pollution in the upper reaches of the supply chain is particularly prominent in the supply chain,environmental pollution problems in the supply chain are mainly concentrated in the upstream suppliers.For example,in 2010,China’s annual output of photovoltaic cells accounted for about 40%of global production,ranked first in the world for three consecutive years,of which the photovoltaic cell itself as a clean energy products,its main raw material silicon production process has consumed a lot of energy and produce all kinds of pollutants.Most of PV products are sold abroad.High energy consumption and heavily polluted upstream production are mainly left in China.Many pollutants are discharged without proper disposal and pollute the environment.And due to tax,employment,economic development and other real needs,some local governments adopt tacit and tolerant attitude for high energy consumption,heavily polluting enterprises.In order to cope with the increasingly serious environmental pollution problems,environmental organizations such as IPE which are facing local protectionism and the media impose environmental pressure on influential brand manufacturers in the supply chain to promote upstream suppliers to improve environmental performance.For example,in 2012,under the pressure of environmental protection organizations such as IPE and the media,Apple strengthen the level of regulation of upstream suppliers of spare parts products,prohibit the use of harmful PVC chemical substances in China,and commit to undertake the improvement of the environmental costs of parts and components,under Apple’s environmental pressure and resources to support efforts,the upstream suppliers improve the level of environmental protection parts and achieve greater results.Brand manufacturers strengthen the level of supervision of the upstream suppliers of environmental protection,mainly to take "turnip"(subsidy strategy)and"stick"(punishment policy)policy.However,because China is in the early stages of the development of environmental supply chain,a simple punishment strategy is easy to be members of the upper reaches of the supply chain resentment and conflict.Therefore,this paper discusses subsidy strategy which brand manufacturers subsidize strategies for upstream suppliers.That is,to increase the enthusiasm of the upstream suppliers which produce environmentally friendly parts,the brand manufacturers give upstream suppliers a certain amount of economic subsidies.Brand manufacturers which subsidize upstream suppliers have many different modes of subsidy practice,there are two main ways more common.First,the brand manufacturers and their upstream suppliers strengthen technical cooperation,joint investment in equipment and other environmental protection innovation,that is input subsidies to upstream suppliers;Second,the brand manufacturers prefer the high level of environmental protection parts and components products,through the provision of higher prices to the upper reaches of the subsidy to suppliers,that product subsidies.Firstly,this paper introduces the background and significance of this paper,identifies the research ideas and research framework,and points out the main research methods and innovative points of the paper.Secondly,it analyzes different subsidy models and buy power’s influence from the domestic and foreign related literatures.The third chapter and the fourth chapter are the core chapters of this article,and the three-stage game model of the brand manufacturers to the upstream suppliers is established by using the modified Hautlin model in the game theory.The first stage:due to the upstream suppliers,the brand manufacturer choose the subsidy rate or subsidy price;the second stage:the upstream suppliers to determine the level of environmental protection;the third stage:the two downstream manufacturers to determine the price of their products.By studying the influence of different subsidy models on the price of the product,the quantity of sales and other economic variables,and analyzes the research results under different subsidy models,and observes that the different subsidy models are different to the upstream suppliers environmental protection investment,supply chain profits and other factors;Finally,through the model analysis and numerical analysis discussed the change of each parameter,and the corresponding conclusions of the research results,combined with the current economic environment of China’s economic transformation,given the corresponding policies and recommendations.Brand manufacturers tend to have a certain buy power to the upstream suppliers,and has the advantage of negotiations in the purchase process,so can access to parts at a certain price discount;in order to encourage suppliers to increase environmental protection investment,improve the environmental protection level of product,brand manufacturers can give some support to the upstream suppliers in the stage of environmental protection innovation,such as investing funds to promote their R&D,providing the upstream suppliers with the corresponding machines and equipment.For example,Haier and BASF in the cooperation of the magnetic refrigeration appliances project,Haier BASF R&D investment in the stage that is given financial and mold support.Under the input subsidy model,the model analysis shows that under the influence of the buy power,the brand manufacturer’s discount effect to the upstream supplier is larger than the purchase price of the general manufacturer.The brand manufacturer The optimal subsidy rate of the upstream suppliers declines,the suppliers’ environmental investment funds decrease first and then rises,the profit level of the brand manufacturers and the upstream suppliers shows the "water bed effect",the consumer surplus and the whole supply chain The profit level will also increase with the price discount effect increases.In addition to input subsidies,brand manufacturers can also increase the upstream suppliers of environmentally friendly parts of the upper reaches of the purchase price incentives upstream suppliers.For example,Haier uses BASF environmental advanced polyurethane composite material in the product line,Haier give the new material prices twice the market price to BASF environmental protection.Under the model of product subsidy,the results of model analysis show that under the influence of buy power,the greater the discount effect of the brand manufacturer to the upstream supplier,that is,the lower price than the general manufacturer’s purchase price,The change of buy power has no effect on the supplier’s environmental protection investment level,brand manufacturers,general manufacturers and upstream suppliers.The improvement of upstream suppliers’enviromental protection innovation level can improve the brand manufacturers,General manufacturers and upstream suppliers of the profit level.