Competition of two green and regular supply chains under environmental protection and revenue seeking policies of government

• We consider competition of one green supply chain and one regular supply chain.
• We examine the effects of three policies of government on the chains’ competition.
• There are specific boundaries for government’s tariffs that assure market stability.
• The tariffs’ effects on product prices depend on substitutability of products types.
• The chains’ environmental impacts increase as the government raises its revenue.

In recent years, many socially responsible governments employ economic incentives and deterrents to manage environmental impacts of enterprises. We develop a price competition model of two green and regular supply chains under the influences of government financial intervention. The supply chains that each consists of one manufacturer and one retailer provide different types of a product which are partially substitutable in market. We formulate the problem as a game theoretical model in the form of six scenarios based on government tendencies and decision-making structures of supply chains. We analyze the effects of government’s tariffs on the players’ optimal strategies and we find that there are specific boundaries for tariffs which guarantee stable competitive market. Numerical results reveal that the environmental protection and social responsibility tendencies of the government have measurable impacts on the government’s revenue as well as supply chains’ and their members’ profits.