Carbon emissions, technology upgradation and financing risk of the green supply chain competition

Abstract

The major obstacle to reducing carbon emissions is the high cost of adopting clean energy, which reduces the market competitiveness of companies using clean energy. In this paper, we study the asymmetric duopoly models of two competing supply chains with different carbon emission technology. The financing risk of the supply chain's carbon emission technology investment could be available as complete or incomplete information to its competitor. We find that the financing risk of carbon emission technology upgradation does not affect either chain's choices of equilibrium quantities and prices in the complete information case. If this information is incomplete for the traditional supply chain, financing risk plays an important role in determining optimal quantities and optimal prices. To encourage the use of clean energy technology to reduce carbon emissions, government should use the per-product carbon emission tax to encourage the traditional supply chain to upgrade its carbon emission technology, and should encourage financial institutions to provide preferential loans to the supply chain that has carbon emission technology disadvantage in the market.