The Game Analysis of Manufacturers’ Political Connections on Product Safety in Supply Chain: Evidence from China

This paper studied the political connections on product safety in supply chain. In market economy, information asymmetry exists throughout the entirety of supply chains that ought to ensure product safety. Due to the existence of game relations between the government and manufacturers in the aspects of product safety and regulation, the formation of market equilibrium depends on political connections between the government and manufacturers. Based on study and analyses of a static game model and a dynamic game model, this paper reveals that governments and manufacturers must use positive political connections to achieve product protection and supervision of safety throughout the supply chain. On the other hand, negative political connections lead to losses of both governmental credibility and social profits. This study indicates that inherent mechanism of political connections exists in the supply chain; it will help to enrich the theory of supply chain. 1. Introduction Product safety is an issue of utmost importance all around the world and it is related to the supply chain in its entirety. The situation brings some new problems to traditional supply chain [1]. As the world’s second largest economy, with frequent international business and a large population, China considers product safety a top priority. Product safety affects not only national credibility and the credibility of companies but also the important basic commitments of a nation and its enterprises for users. However, because of information asymmetry, product users require product manufacturers to be highly disciplined and require strict supervision and management of government departments. “Product” refers to everything available in the market that can meet the specific needs of people, including in-kind, service assurance, ideas, and other forms. “Security” refers to the conditions that prevent death, injury, occupational diseases, equipment damage, property damage, and environmental damage. Ensuring the safety of products first depends on sound laws and regulations. In addition, government departments must work with the law, enforce the law, properly regulate rules, and abandon favoritism or irregularities. Second, the manufacturers should develop and enforce their own techniques for ensuring production quality, sustaining the self-regulation of the industry, and maintaining the professional ethics of the employed. In order to strengthen the safety supervision of special equipment, prevent accidents, ensure the safety of people’s lives and property, and promote economic development,