Impacts of AI technology and government subsidy on a dual-channel fresh produce supply chain with loss-reduction

AI technology is believed to reduce loss and improve the level of service. However, profits and fixed investment and usage costs need to be balanced when implementing AI technology. This study considers the impact of government subsidy on artificial intelligence (AI) adoption in a dual-channel fresh produce supply chain (FPSC) consisting of one supplier and two retailers, where the two retailers sell products through online and offline channels separately. The optimal decisions of the FPSC under the two subsidy strategies, i.e., subsidy for the supplier and subsidies for retailers, are investigated. Furthermore, the impacts of the spillover effect, cost sharing allocation, and subsidy ratio on the profits of the FPSC and social welfare are examined. The results show that AI technology effectively reduces the production losses in the FPSC. When the costs of AI technology are moderate, the subsidy for the supplier is more effective. When the spillover effect and market competition are high, the subsidies for the two retailers are the better choice. We also find that a moderate subsidy ratio can improve both AI adoption and social welfare, and an excessively high ratio reduces fiscal efficiency.