Government Subsidy’s Effect on the Channel Strategies of Energy-Saving Supply Chain

Abstract

As subsidy is a popular form of stimulating consumption, not only for home appliances market, the effectiveness of selling promotion subsidies need to be analyzed. In this paper, we check the role of promotion subsidies in the offline channel layout by establishing three models, i.e., no subsidy, customer rebate and retailer subsidy. Two kinds of online-to-offline strategies are considered, which are retailer’s opening separate and sharing offline stores. It is gotten that: both customer rebate and retailer subsidy increase the possibility of opening offline channels by sharing offline store strategy, but customer rebate takes high price than no subsidy while retailer subsidy is on the contrary. With the growing subsidy, both customer rebate and retailer subsidy could make offline channels opened by separate or sharing offline store strategy, but the customer rebate brings more possibilities. Both customer rebate and retailer subsidy require less social welfare to open offline channel, but the customer rebate brings more consumer surplus of opening offline channels than retailer subsidy for a given market area. Therefore, government should give the subsidy to customer, not to retailer, even if it brings the increasing of product’ price.

Keywords

Biform game / online-to-offline strategies / social welfare / service

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