Cost-Sharing Contracts for Energy Saving and Emissions Reduction of a Supply Chain under the Conditions of Government Subsidies and a Carbon Tax

Yi Yuyin,Li Jinxi

doi:10.3390/su10030895

Abstract

To study the cooperation of upstream and downstream enterprises of a supply chain in energy saving and emissions reduction, we establish a Stackelberg game model. The retailer moves first to decide a cost-sharing contract, then the manufacturer determines the energy-saving level, carbon-emission level, and wholesale price successively. In the end, the retailer determines the retail price. As a regulation, the government provides subsidies for energy-saving products, while imposing a carbon tax on the carbon emitted. The results show that (1) both the energy-saving cost-sharing (ECS) and the carbon emissions reduction cost-sharing (CCS) contracts are not the dominant strategy of the two parties by which they can facilitate energy savings and emissions reductions; (2) compared with single cost-sharing contracts, the bivariate cost-sharing (BCS) contract for energy saving and emissions reduction is superior, although it still cannot realise prefect coordination of the supply chain; (3) government subsidy and carbon tax policies can promote the cooperation of both the upstream and downstream enterprises of the supply chain—a subsidy policy can always drive energy saving and emissions reductions, while a carbon tax policy does not always exert positive effects, as it depends on the initial level of pollution and the level of carbon tax; and (4) the subsidy policy reduces the coordination efficiency of the supply chain, while the influences of carbon tax policy upon the coordination efficiency relies on the initial carbon-emission level.

Highlights

In recent years, problems such as energy shortages and environmental pollution have become increasingly prominent
To answer the above questions, a two-echelon supply chain consisting of one manufacturer and one retailer is constructed
This research focuses on the influences of cost-sharing contracts and government policies on the energy-saving and emissions-reduction decisions of the manufacturer and the profits of the upstream and downstream enterprises in the supply chain

Summary

Introduction

Problems such as energy shortages and environmental pollution have become increasingly prominent. Similar to the green supply chain plan of Wal-Mart, manufacturers and retailers have to consider how to cooperate in order to reduce carbon emissions during production, and need to consider how to cooperate to save energy while their products are in service. (3) What are the influences of government subsidies and carbon tax policies on cooperation, energy saving and emissions reduction, and the profits of node enterprises in the supply chain?.

Literature Review

Model Description and Hypotheses

Centralised Decision-Making

Decentralised Decision-Making

Energy-Saving Cost-Sharing Contract

Bivariate Cost-Sharing Contract

Numerical Analysis

Conclusions