R&D subsidy, output subsidy or hybrid subsidy for green R&D in supply chains

Purpose This study examines the impacts of green subsidy policies on the decision-making and performance of supply chain members, including a manufacturer that determines green R&D intensity and wholesale price, and a retailer that selects green marketing efforts and sales volume. Design/methodology/approach By constructing a game-theoretic model, this study investigates the impacts of three subsidy policies (R&D subsidies, output subsidies, and hybrid subsidies) on the green activities of supply chain members, and compares the efficiency improvements achieved by different subsidy policies. Findings Comparative analysis of these subsidy mechanisms yields some key findings. First, the output subsidy exhibits superior (inferior) efficiency to the R&D subsidy in incentivizing green R&D and green marketing and in improving social welfare, when the environmental damage coefficient is relatively low (high). Second, while the hybrid subsidy consistently outperforms the R&D subsidy in incentivizing green R&D and marketing efforts, and in enhancing the profits of supply chain members and social welfare, this subsidy fails to motivate green marketing efforts or boost retailer profits more effectively than output subsidy. Finally, extending the analysis to centralized structures, we counterintuitively find that centralized structure does not necessarily generate higher channel profits and social welfare than decentralized structure under these subsidy policies. Originality/value Despite the abundant literature on green subsidy policies, little attention has been paid to examining the comparative efficiency of such policies—particularly hybrid subsidy policies—in green supply chains where manufacturers conduct green investments and retailers undertake green marketing efforts; equally scarce is attention to their impacts on centralized channels. These findings provide theoretical foundations and managerial implications for governments to make optimal green subsidy policy choices.