Abstract: There have been a large number of fruitful work on supply chain decision-making considering government subsidies, but only the decision-making issues of manufacturers’ independent R&D emission reduction has been studied, and the production decision making when manufacturers outsource emission reduction tasks has not been considered. None of the literatures have explored the impact of different government subsidy approaches on manufacturer’s emission reduction options. In view of the above consideration, a three-level green supply chain is constructed that composed of suppliers, manufacturers and consumers to explore this issue. Considering the manufacturer investing R&D to emission reduction or outsourcing the emission reduction task, the Stackelberg game model is employed to explore the decision-making issue under the government subsidy approaches basing on emission reduction R&D investment or emission reduction amount of unit product in green supply chain.From the perspective of manufacturer, the manufacturer’s decisions of two actions for emission reduction are compared when given government subsidy approach. Secondly, from the government’s perspective, when manufacturer’s action is given, the effects of emission reduction between two approaches of government subsidy are compared. Further, numerical simulation is conducted to analyze the impact of subsidy factors on supply chain’s decision-making under two subsidy approaches. The results show that when the government adopts the subsidy method basing on emission reduction R&D investment, manufacturer's profit of R&D emission by themselves is higher than outsourcing emission reduction task. When the government adopts the subsidies basing on emission reduction amount of unit product, the manufacturer’ profit and the emission reduction amount per unit of product in investing R&D to emission are more than the outsourcing emission reduction task. When manufacturer chooses to invest R&D to emission reduction, compared to subsidy approach of basing on emission reduction of unit product, the amount of emission reduction of the government subsidy basing on R&D investment is higher, and the profit is lower. When the manufacturer outsources the emission reduction task, the carbon reduction effect and the profit in the two approaches of government subsidies are identical. Numerical simulations are conducted to verify the above results, and it shows that the subsidy coefficient has significant impact on the emission reduction and profit.These conclusions provide theoretical basis and significant implications for the government to formulate reasonable subsidy policy and the enterprise to choose proper emission reduction strategies.

Key words: subsidy approach; carbon emission reduction; green supply chain; emission reduction outsourcing； Stackelbergmodel