Green supply chain coordination considering government intervention, green investment, and customer green preferences in the petroleum industry

Supply chain players in emissions-intensive industries are not likely to be motivated to make appropriate green improvements because significant investment is required for innovation and process improvement. This study aimed to analyze green supply chain coordination through which high supply chain performance can be achieved and green improvements and customer green preferences are considered. We proposed a two-part tariff (TPT) contract involving government intervention in terms of tax or subsidy. We demonstrated that the proposed TPT contract can achieve global supply chain optimization and aid in achieving green improvement. We further illustrated that the optimal green improvement degree is influenced by green technology investment, government intervention, and additional demand from customer green preferences. We showed that stronger government intervention may not always lead to higher green improvement and government should switch from taxes to subsidies in the high green investment cost scenario. Moreover, the government can benefit from low-cost green technologies. This study indicates that appropriately planned government intervention can increase the supply chain performance and aid in achieving sustainable goals. (C) 2019 Elsevier Ltd. All rights reserved.