Abstract: Considering that the market demand is affected by product's green level, publicity intensity and price, the Stackelberg game method is used to investigate the green supply chain operation strategy under the contract of mutual sharing of the manufacturer's green level input cost and retailer's publicity cost. The results show that the two-way cost sharing contract can not only improve the performance of supply chain members and the overall supply chain, but is also better than the one-way cost sharing contract. In the two-way cost sharing contract, manufacturers increase their profits by increasing the wholesale price of products, which leads to product's retail prices increase and the consumer utility reduction; when consumers are sensitive to the green level and publicity intensity, supply chain members will increase product demand by improving the level of both, so as to achieve the purpose of improving the profits of supply chain members and the overall profits of the supply chain.

Key words: green supply chain, two-way cost sharing, Pareto improvement