Active or passive? Sustainable manufacturing in the direct-channel green supply chain: A perspective of two types of green product designs

This paper considers a supply chain in which a manufacturer produces and sells two types of green products in its direct channel under government interventions aiming to improve social welfare. There is a Stackelberg game between the two stakeholders. Our research derives the closed form solutions to the optimal tax, green degree and price for the products, and obtains the strategies for government and manufacturer under different environmental policies. By considering six scenarios, our models obtain the best choice from the comparison between the two cases in which the manufacturer determines its product green degree actively or accepts the green standard set by the government passively. Then, we conduct some sensitivity analyses and explore the scenario in which there is competition between green products and non-green products. The results of this research indicate that the government setting the product green standard and providing the manufacturer with a subsidy is significant.