Do Consumer’s Green Preference and the Reference Price Effect Improve Green Innovation? A Theoretical Model Using the Food Supply Chain as a Case

Today, complex consumer purchase decisions affect company revolution, especially that dealing with environmental (green) innovation. Consumer preferences and pricing could interact in influencing green innovation. This situation is especially vital in industries that are characterized with many safety concerns that urge collaborative development between consumers and companies, such as the food industry. The aim of this paper is to explore the influence of the change in consumer preference characteristics on the green innovation efforts of the food supply chain, introducing the green preference of consumers and the reference price effect. A differential game model of green innovation in the food supply chain is constructed in this paper and solved. It was found that the change in consumer preference characteristics is an important factor to motivate supply chain members to make green innovation efforts. With the enhancement of consumer preference characteristics, the Pareto improvement effect of cost-sharing contracts on the profits of supply chain enterprises is clearer. Further, manufacturers can stimulate suppliers’ green innovation efforts through cost-sharing contracts. When the marginal profit ratio of food supply chain members reaches a certain threshold, the incentive effect of this cost-sharing contract is more significant, and it is more likely to realize the optimal profit of the food supply chain.