Carbon emission reduction cooperation of three-echelon supply chain under consumer environmental awareness and cap-and-trade regulation.

Abstract

Considering that both the manufacturer's production process and the transporter's freight process produce carbon emissions, this paper constructed a three-echelon supply chain composed of a manufacturer, a transporter, and a retailer. This article studies the cooperative carbon emission reduction among the supply chain members under the carbon cap-and-trade policy and consumer environmental awareness. We used the Stackelberg game to explore four scenarios as follows: (1) in the non-cooperative decision model, no cooperation takes place among all supply chain members; (2) in the local cooperation decision of the manufacturer and the transporter alliance model, the manufacturer and the transporter work together to make decisions reducing carbon emissions, but each member of the supply chain makes its own pricing decisions; (3) in the local cooperation decision of the retailer-transporter alliance model, there is no cooperation except that the retailer and the transporter cooperate with each other to determine the selling price of the product; and (4) in the overall-cooperative decision model, there is complete cooperation among the members of the supply chain, who collectively decide on carbon emission reduction and the selling price of the product. Then, using the backward induction method, we derived and compared the equilibrium solutions and the profits of the supply chain system. The results showed that the scenario of complete cooperation among all supply chain members had the best performance in carbon emission reduction, market equilibrium quantity, and the supply chain system's profit, but the selling price of the product was likely to be higher than other scenarios. Two contracts have been proposed to coordinate the supply chain system. The cost-sharing contract is effective but imperfect under limited constraints. The two-part tariff contract can realize perfect coordination of the supply chain. Finally, we obtained several interesting conclusions from the numerical example and provide managerial insights and policy implications from the analytical results.