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To promote the development of green products' market, the Green Supply Chain (GSC) is a key tool for enterprises. The reasonable coordinating and incentive mechanisms between the members in the GSC are helpful for the effective operation of GSC. For a two-echelon GSC system including a manufacturer and a supplier, the green degree of raw material is the private information for the supplier. To solve this asymmetric information problem, an incentive mechanism is designed by applying the transfer payment method as well as the optimal control theory. It indicates that the proposed mechanism can reveal the real green degree of raw material provided by the supplier and achieve the mutually beneficial maximization as far as possible. The conclusions have good guidance values for the GSC's operation at initial stage of the green market.

The Incentive Mechanism of Green Supply Chain for Raw Material Procurement