Development of a Cournot-oligopoly model for competition of multi-product supply chains under government supervision

Abstract

Globalization, increased governmental regulations, and customer demands regarding environmental issues have led the organizations to review the measures necessary for the implementation of the Green Supply Chain Management (GSCM) to improve the environmental and economical performances. The paper proposes a Cournot-oligopoly model for green supply chain management. It provides a novel approach to construct a model that maximizes government tariff and profits of the suppliers and manufacturers in all the GSCs. The bi-level model is converted to a single-level model by replacing the second level with its Karush Kuhn Tucker (KKT) conditions and linearization techniques. Then, a Genetic Algorithm (GA) is utilized to solve the single-level model using MATLAB software. Afterwards, the obtained results are compared with optimal solutions acquired by Enumerative Method (EM) to evaluate the validity and feasibility of the proposed GA. The sensitivity analysis of this model indicates that the fiscal policy of the government greatly affects the reduction of environmental pollution costs caused by industrial activities such as automobile production in a competitive market. Therefore, the amount of non-green products' taxes is directly related to the decrease of environmental pollution.