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Research on single/cooperative emission reduction strategy under different power structures
Jingna Ji1, Jiansheng Huang2,3
1School of Business Administration, Guangdong University of Finance and Economics, Guangdong, Guangzhou, 510320, China. jijn@gdufe.edu.cn.
Environmental Science and Pollution Research International
|March 23, 2022
Summary
Cooperative emission reduction (CER) is optimal for supply chains under cap-and-trade (C&T) regulations. Retailer-dominated structures enhance low-carbon outcomes and profits as carbon prices rise.
Area of Science:
- Operations Research
- Environmental Economics
- Supply Chain Management
Background:
- Growing consumer demand for low-carbon products.
- Increasing implementation of cap-and-trade (C&T) regulations to control emissions.
- Need for strategic decision-making in two-echelon supply chains regarding emission reduction.
Purpose of the Study:
- To analyze low-carbon decision-making in a two-echelon supply chain.
- To compare manufacturer-dominated (MD) and retailer-dominated (RD) power structures.
- To evaluate single emission reduction (SER) and cooperative emission reduction (CER) modes under C&T regulation.
Main Methods:
- Game theory modeling to represent supply chain interactions.
- Analysis of two power structures: MD and RD.
- Investigation of two emission reduction modes: SER and CER.
- Numerical analysis to assess the impact of carbon price fluctuations.
Main Results:
- Cooperative emission reduction (CER) is consistently beneficial for supply chain enterprises.
- A looser cap-and-trade (C&T) regulation encourages cooperation.
- Under SER, the manufacturer's profit is not always reduced by losing dominance.
- Retailer-dominated structures are profitable for retailers and the overall supply chain.
- Carbon price volatility significantly impacts manufacturer decisions more in CER than SER.
- Higher carbon prices favor RD structures for improving supply chain low-carbon levels and profitability.
Conclusions:
- Cooperative emission reduction (CER) and retailer-dominated structures are strategic choices for enhancing supply chain sustainability and profitability under C&T regulations.
- The effectiveness of power structures and emission reduction strategies is contingent on the stringency of C&T regulations and carbon prices.
- Policymakers should consider the interplay between C&T stringency, carbon pricing, and supply chain structure to incentivize low-carbon transitions.
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