Carbon reduction decision-making in supply chain under the pledge financing of carbon emission rights

Abstract

Supply chain enterprises can solve the cost problem caused by emission reduction through the pledge financing of carbon emission rights. This paper aims to optimize the pricing and ordering strategy and carbon reduction decision of the supply chain based on the pledge financing of carbon emission rights, establishes the expected revenue model of the manufacturer and the retailer, and analyzes the mechanism of the carbon reduction decision of the supply chain on its pricing and ordering strategy, expected revenue and revenue distribution strategy. The results illustrate that the optimal order quantity and the optimal wholesale price maximize the expected revenue of the retailer and the manufacturer, regardless of whether the pledge financing of carbon emission rights is introduced. With the adoption of the pledge financing of carbon emission rights, there is an optimal amount of carbon emission reduction per unit of the product to maximize the optimal order quantity. When both order quantity and wholesale price are optimal, the present value of expected revenue for the retailer and the manufacturer increases with the amount of carbon reduction per unit of product. The upper and lower limits of the retailer's share of sales revenue rise and fall as the amount of carbon reduction per unit of product increases, respectively.