Strategies for poverty alleviation supply chain with government subsidies and misreporting behavior in China

Abstract

In the poverty alleviation supply chain, subsidies for enterprises or farmers are widely implemented as part of government policy. However, subsidy fraud often occurs, such as misreporting cost information to secure subsidies. Inspired by this, our study aims to explore the optimal decision-making problem of the three-level (government + enterprises + farmers) poverty alleviation supply chain under asymmetric cost information. Four-stage models are constructed to capture the interactions among these three players. Additionally, numerical examples are used to analyze the implications of key parameters, such as cost coefficient and punitive measures coefficient, on supply chain members' optimal decision and profit. Our findings demonstrate that both the enterprise and the farmer can obtain maximum profit from the misreporting behavior. Unfortunately, this behavior always damages the profit of other participants and weakens the efficiency of subsidy policy. Moreover, to mitigate the negative implication of misreporting behavior, the government can establish punitive measures to curtail misreporting. Our work provides important policy implications for governments and enterprises. To ensure that more consumers have access to poverty alleviation products, government organizations should prioritize such projects. In addition, the provision of public facilities and technical guidance should be more effective and prompt to share enterprises' and farmers' costs. We further recommend that subsidy policies be formulated according to recipients' performance in poverty alleviation projects, with corresponding supervision and punitive measures. Finally, in cooperating with farmers in poverty alleviation, enterprises should maximize their interests and reduce costs through technological innovation and channel sharing.