The Impact Mechanism of Different Government Subsidy Methods on Emission Reduction Decisions in the Petroleum Supply Chain

Abstract

Global climate change presents severe challenges to both ecosystems and human societies, necessitating profound structural adjustments in high-emission industries, such as petroleum. This paper develops a two-tier supply chain model comprising a single raw material supplier (leader) and a single refining manufacturer (follower) to examine the effects of R&D cost subsidies and per-unit emission reduction subsidies on supply chain equilibrium decisions and social welfare under three cooperation modes: non-cooperative, cost-sharing, and full cooperation. The results indicate that both types of subsidies effectively elevate wholesale prices, retail prices, emission reduction levels, and supply chain profits. However, per-unit emission reduction subsidies prove more effective in stimulating short-term emission reductions by manufacturers, whereas R&D cost subsidies are more conducive to fostering long-term technological innovation and enhancing emission reduction benefits across the supply chain. Furthermore, social welfare is significantly higher under the R&D cost subsidy strategy than under the per-unit emission reduction subsidy. The study also demonstrates that the full cooperation mode achieves optimal emission reduction performance in the supply chain, and the R&D cost subsidy strategy strengthens overall supply chain profitability and market competitiveness. When designing subsidy policies, governments should account for the roles, technological capabilities, and cost structures of supply chain members, prioritize full cooperation modes, and mitigate risks associated with cost-sharing models under high subsidy intensities to maximize policy effectiveness.