Accounts Receivable Financing and Supply Chain Coordination under the Government Subsidy

Abstract

With respect to a two-echelon supply chain which comprised of a core manufacturer and a capital-constrained supplier, this paper analyzed the effect of government subsidy to the accounts receivable financing in the context of third-party partial guarantee. Based on the decentralized decision-making model without and with government subsidy, from the perspective of promoting the guarantee coefficient of the third-party guarantee, this paper studied how government subsidy impacts the supply chain coordination. The results show that government subsidy can reduce financing risks and costs, but not the bigger the better. Supplier's profit, manufacturer's profit and whole supply chain profit Pareto is also improved. In the range of a reasonable government subsidy coefficient, the higher government subsidy coefficient, the higher supply chain financing efficiency and supply chain coordination. Finally, this paper conducts some numerical experiments to verify the results.