Benefits of market information and professional advice in a vertical agricultural supply chain: the role of government provision

We study a vertical agricultural supply chain with a farmer cooperative who decides his agricultural product selling price and a social enterprise who makes her order quantity decision and resells products to the end market. The effect of market information and agricultural advice provided by the government on the system's outcomes is investigated. A two-stage game model is proposed to characterise this vertical relationship. The equilibrium decisions of the two players under different government supporting cases are derived. We contrast the system outcomes under different cases and conduct comparative analysis. It is found that (1) the farmer cooperative's profit increases if the government provides market information to him and the social enterprise at the same time; (2) the agricultural advice provided by the government can increase the benefits to each participant in the supply chain; (3) to maximise the total supply chain profit as well as its sustainability, the government may choose to provide market information to the social enterprise only; (4) when the wholesale price is intervened by the government or exogenously provided, the social enterprise's social responsibility concern can increase both the farmer cooperative's profit and the social enterprise's social payoff.