Pricing decisions of green supply chain considering products’ green degree and sales efforts under government subsidy

Purpose For the green supply chain composed of a green product manufacturer and a green product retailer, this paper studies the equilibrium decisions under three scenarios: (1) the government provides green degree subsidy for the manufacturer; (2) the government subsidizes the R&D and innovation cost of the manufacturer; (3) the government subsidizes the sales effort cost of the retailer. Design/methodology/approach In view of the green preference awareness of end consumers, we analyze the changes of product green degree, green sales effort, product pricing decision, the manufacturer’s and the retailer’s profit and social welfare. The results show that government subsidies will encourage the manufacturer to produce greener products, while subsidizing the manufacturer are more effective than subsidizing the retailer; sales effort cost subsidies can directly motivate the retailer to pay more sales effort and thereby increase the green product sales. Findings With the same government subsidies, green R&D and innovation cost subsidies are more favorable for the retailer, and the subsidies for green degrees are more favorable for the manufacturer. No matter what kind of subsidy strategy, it can effectively improve the green degree of products, and compared with subsidizing the retailer, subsidizing the manufacturer can improve the green degree effect better. Originality/value Government subsidies can effectively improve social welfare, so the government can promote the improvement of social welfare through subsidy distribution. Under the same government subsidy expenditure, the social welfare under the subsidized the retailer is higher than subsidizing the manufacturer.