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This paper investigates the optimal financing decisions of capital-constrained manufacturers under different power structures. Using a Stackelberg game model, it analyzes the optimal equilibrium operational decisions of capital-constrained manufacturers at varying levels of internal capital. The study finds that, compared to a power structure dominated by eco-innovative enterprises, a power structure led by ordinary enterprises enhances the level of eco-innovation of innovative products and the overall profitability of the supply chain. When eco-innovative enterprises are well-capitalized, internal financing has lower costs but may lead to idle funds, while bank financing and mixed financing have higher costs but make full use of available capital. When eco-innovative enterprises are undercapitalized, mixed financing is the optimal choice. The research employs numerical simulations to analyze the impacts of consumer environmental awareness, innovation investment costs, and production costs on the level of eco-innovation in products, manufacturers’ profits, and the overall profitability of the supply chain, providing decision-making references for governments and enterprises.
Xie et al. (2024) studied this question.