Evolutionary game analysis for non-cooperative behavior of entities in a closed-loop green supply chain under government intervention

Decentralized behavior of entities in a green supply chain plays a significant role in pricing and green innovation effort to produce more environment-friendly products at affordable prices. Government intervention (e.g, subsidy for green production, Cap-and-Trade Policy (CTP)) is a crucial component for diminishing carbon emissions due to the manufacturing of new products and recycling of used products. In this study, we investigate the long-term decentralized behavior of supply chain members and the evolutionary stable decision of the government to intervene in price and sales effort competition among retailers. More precisely, through an evolutionary game theoretic framework, we look for the non-cooperative behavior of the population of retailers who compete with each other over price and sales effort under government intervention and CTP. The model is further extended to analyze the evolutionary behavior of the population of government whether it intervenes or not in the same situation. Our study demonstrates that the whole population of retailers adopts the retailer-led Stackelberg strategy to deal with the manufacturer, and the most significant finding is that, in such a situation, government intervention is always favorable regardless of what the supply chain decides. Numerical results exhibit that whenever retailers dominate the market, it becomes beneficial for both retailers as well as the entire supply chain, and the environmental performance of the product also increases compared to the Vertical Nash scenario.