Abstract: To control government cost and guarantee enterprise income, this paper constructs a differential game model of government and enterprise joint reserve of emergency materials, and studies the optimal reserve decision of the government and enterprises under two modes of cost sharing and cooperation. Furthermore, it analyzes the influence of government procurement pricing on the optimal decision-making of the government and enterprises and the benefits of both sides. Finally, the case of Wenchuan earthquake emergency material reserve is verified. It is found that the trajectory of the emergency material reserve decreases monotonically with time, the changing trend of reputation trajectory is diversified, and both of them are optimal in the cooperative mode. In the cost-sharing mode, the reserve effort level and procurement pricing of both parties show an inverted U-shaped distribution. That is, when the government procurement pricing is lower than a certain threshold, enterprises have a higher willingness to cooperate in production capacity reserve, and vice versa, thus demotivating enterprises from taking opportunistic actions. And only when certain conditions are met, will the government provide cost subsidies for enterprises, so that the government will not lose control of reserve cost. The cooperative mode can effectively reduce the cost of government procurement, increase the number of emergency supplies, and achieve a win-win situation between the government and enterprises. In addition, the influence of some important parameters on the optimal decision-making of the government and enterprises is discussed.

Key words: emergency supplies reserve, differential game, purchase price, production capacity reserve, physical reserve