Subsidizing manufacturers versus consumers: the role of fairness concerns in a competitive green supply chain

Abstract

Abstract This paper examines the impacts of consumers’ and manufacturers’ fairness concerns on supply chain decisions and compares alternative government subsidy policies. A two-stage supply chain model is developed under three scenarios: benchmark, subsidies to green manufacturers, and subsidies to green consumers. The results indicate that fairness concerns significantly affect market outcomes. Consumers’ fairness concerns can enhance the competitiveness of green products, while manufacturers’ fairness concerns tend to intensify competition and reduce retailer profits. Although both subsidy schemes have identical feasible subsidy ranges, they operate through different mechanisms. Both subsidies can improve green product competitiveness and social welfare under the proposed model, while consumer subsidies generate stronger demand expansion effects. This study incorporates bilateral fairness concerns into green supply chain analysis and provides theoretical and policy insights for designing subsidy schemes that promote sustainable development.