Emission reduction decision and coordination of a make-to-order supply chain with two products under cap-and-trade regulation

Cap-and-trade has become one of the most widely used carbon emission limitation methods in the world. Its constraints have a great impact on the carbon emission reduction decisions and production operations of supply chain enterprises, as well as profit distribution. In the construction supply chain, there are few studies on the profit distribution and emission reduction decisions considering cap-and-trade policy. This paper investigates the profit distribution model of a two-echelon construction supply chain consisting of a general contractor and a subcontractor with cap-and-trade policy. Using game theory and Shapley value method, the optimal emission reduction decisions and profit distribution under three cooperation modes of pure competition, co-opetition, and pure cooperation are obtained, respectively. The research shows that the profits of the construction supply chain are increasing in pure competition, co-opetition, and pure cooperation scenarios, and the emission reduction amount of the construction supply chain in the case of pure cooperation is greater than that of pure competition and co-opetition. The carbon emission reduction amount under the co-opetition scenario is not always greater than that under the pure competition scenario, which depends on the emission reduction cost coefficient relationship of general contractor and subcontractor. When the cost coefficient of emission reduction of the general contractor is less than that of the subcontractor, the emission reduction amount under pure competition is larger than that under co-opetition. A numerical study is carried out to verify the conclusions and illustrated the profits of the supply chain decreased with the increase of carbon emission reduction cost coefficient, and had nothing to do with the emission reduction efficiency of enterprises.

Energy performance contracting (EPC) is a new tool for supply chain members to cooperate in emission reduction. This paper investigates a two-tier supply chain composed of a supplier and a capital-constricted manufacturer with carbon reduction demand under different low-carbon policies (Cap-and-Trade Regulation and Carbon Tax Policy, respectively). The manufacturer is motivated to cooperate with the supplier to reduce carbon emissions through EPC services. Different from other research, the emission reduction decision maker of EPC services in this paper could be any supply chain member. The results show that cap-and-trade regulation and carbon tax policy have the same impact on the optimal pricing and emission reduction decisions in the monopoly supply chain, but the manufacturer’s profit is higher under cap-and-trade regulation. And when the cost-sharing coefficient is within a low range, the emission reduction targets decided by the manufacturer are lower. Otherwise, the targets decided by the supplier are lower. Moreover, supply chain members can obtain higher profits when the reduction targets are determined by themselves, and supply chain coordination under different decision models could be realized through revenue sharing contracts. Considering the total profit of the supply chain, when the cost-sharing rate is within a low range, the supply chain can achieve a Pareto improvement if the supplier determines the emission reduction targets. Otherwise, the reduction targets decided by the manufacturer can realize a Pareto improvement.

Impact of three emission reduction decisions on authorized remanufacturing under carbon trading

PurposeOutsourcing remanufacturing is a major form of remanufacturing, and emission reduction is an important part of a manufacturer's production. This paper aims to investigate carbon emission reduction strategies in a closed-loop supply chain (CLSC) with outsourcing remanufacturing and design a contract to coordinate the CLSC.Design/methodology/approachThe authors establish two-period game models between an original equipment manufacturer (OEM) and third-party remanufacturer (TPR) in different scenarios, including decentralized decision, centralized decision and coordinated decision. Furthermore, the authors study the optimal decisions by maximizing the profit model. The authors also investigate the impact of a carbon tax and emission reduction on the optimal decisions through comparative analysis.FindingsEmission reduction increases the quantity of new products and the OEM's profit. However, emission reduction decreases the outsourcing fee, which is not conducive to remanufacturing; thus, the TPR's profit does not necessarily increase. Compared with a decentralized scenario, the output of remanufactured products and the total profit increase. When the acceptance level of remanufactured products is high enough or when emissions from remanufacturing are low enough, the total carbon emissions are reduced in the centralized scenario. For the coordination of the CLSC, the OEM needs to increase the outsourcing fee and the TPR needs to share part of the emission reduction costs.Research limitations/implicationsThe TPR can choose three different remanufacturing strategies, namely, no remanufacturing, partial remanufacturing or full remanufacturing. For the majority of firms, it is difficult to remanufacture all used products. Therefore, the analysis is based only on partial remanufacturing.Practical implicationsThe results provide insights for remanufacturing and emission reduction decisions, as well as a decision basis for the cooperation between the OEM and TPR.Originality/valueThe authors combine the OEM's carbon emission reduction with outsourcing remanufacturing, and investigate the impact of technological spillover on the TPR's profit.

This paper develops low-carbon decisions in a two-echelon supply chain considering consumers' low-carbon preference and cap-and-trade (C&T) regulation. Two different power structures are considered, including manufacturer-dominated (MD) and retailer-dominated (RD) cases. The single emission reduction (SER) mode where only the manufacturer invests in low-carbon technology and the cooperative emission reduction (CER) mode where the manufacturer invests in low-carbon technology and the retailer invest in low-carbon promotion are investigated respectively. It is found that a relatively loose C&T regulation helps to promote the cooperation of supply chain enterprises. Under both MD and RD cases, CER mode is always a rational choice for supply chain enterprises. Under SER mode, the manufacturer's profit will not always decrease when he loses the dominant position. However, the RD case is profitable for the retailer and the supply chain. Under CER mode, the dominant role is important for both the manufacturer and the retailer. However, the profit of the supply chain under RD case may be lower than that under MD case. Through numerical analysis, we found that the fluctuation of carbon price has a more significant impact on the manufacturer's emission reduction decision under CER mode than that under SER mode. In addition, with the increase of unit carbon price, the RD case performs better than the MD case in promoting supply chain's low-carbon level and profit.

The growth in carbon emissions is increasingly exacerbating global warming. As the principal source of carbon emissions, companies can effectively enhance their emission reduction levels through the vertical spillover of emission reduction technologies to investigate the impact of vertical spillover rates, consumers’ low-carbon preference coefficients, emission reduction cost coefficients on optimal supply chain decisions, and profits in centralized and decentralized decision-making environments. Considering consumers’ preferences for low-carbon options, this paper constructs a Stackelberg game model under centralized and decentralized supply chain decision-making scenarios. It examines the effects of considering the vertical spillover effects of emission reduction versus not taking them into account. Using backward induction, this study optimizes the emission reduction levels of leading suppliers and manufacturers. The results indicate that an increase in consumers’ low-carbon preference levels and vertical spillover rate not only enhances the emission reduction levels of suppliers and manufacturers but also increases their profits. Conversely, an increase in emission reduction cost coefficients impedes emission reductions, with a more pronounced effect under vertical spillover conditions. In centralized decision-making, increases in vertical spillover rates, consumers’ low-carbon preferences, and decreases in emission reduction cost coefficients create a synergistic effect, resulting in greater increases in emission reduction levels and profits for suppliers and manufacturers compared to the sum of the effects of changes in individual coefficients. This finding provides new insights for governments in formulating relevant policies to promote corporate emission reductions.

Production and joint emission reduction decisions based on two-way cost-sharing contract under cap-and-trade regulation

Against the backdrop of cap-and-trade regulations, we construct a low-carbon supply chain in which a seller holds the manufacturer’s equity. We investigate the impact of the seller’s equity holding and the cap-and-trade regulations on the supply chain members’ optimal decisions, profits and coordination in the cases of information symmetry and asymmetry. We find that, regardless of whether there is information asymmetry or symmetry, the manufacturer always benefits from an equity holding, while the seller can only earn higher profits through equity holding if the percentage of equity holding and the level of consumer low-carbon awareness are both sufficiently high. Both the seller and the manufacturer prefer the information asymmetry scenario when the manufacturer’s efficiency in emission reduction is below a particular threshold. In addition, equity holding can incentivize the manufacturer to share its information with the seller. Equity holding is beneficial for emission reduction and market demand but is not always beneficial for improving the supply chain’s total profit and reducing the supply chain’s total carbon emissions. Finally, with a transfer payment contract, a decentralized supply chain can obtain the same optimal profits as in the centralized supply chain scenario, and both the manufacturer and seller can earn higher profits than before.

For carbon emissions under the limit of supply chain cost sharing problem, based on the Shared contract perspective starkerberg game model includes the manufacturers and retailers, analyzes the cost sharing ratio, carbon trading price and unit carbon tax emissions on the supply chain, and the optimal strategy combination and carbon reduction cost allocation ratio is studied. The results show that the one-way cost sharing model is beneficial to the reduction of low carbon supply chain, while the two-way cost sharing model has a positive effect on the reduction of supply chain within the small allocation ratio. In addition, the sharing proportion of manufacturers is within a certain range, and the two-way emission reduction mode is the optimal choice for the supply chain. Meanwhile, the sharing proportion will affect the choice between decentralized and centralized decisions. In addition, the numerical analysis shows that the carbon emission reduction levels increase with the increase of carbon trading prices. The results have good reference significance for the carbon emission reduction decision and carbon reduction cost sharing contract among members of the low-carbon supply chain.

Along with the trend of low-carbon development, the government adopts a series of measures to control carbon emissions. Here, in the case with constraint of carbon cap and both firms and consumers have low carbon preference, we study the firm production decision problems in a supply chain consists of three firms The latest-firm-dominant situation is discussed by using Stackelberg game and we obtain the optimal output and emission reductions by the converse solution method. It shows that the optimal reduction decision of a firm is to make its marginal emission reduction cost slightly larger than purchase the corresponding emission rights from the carbon transaction market. The emission reduction of one side in a supply chain will motivate the others in the supply chain. With the enhancement of consumer low-carbon preference, the sales price will rise and lead to profits rise of the whole supply chain, but not all firms are profits benefit. Based on the above analysis, we extend the model to n firms aims to make some guideline sense for supply chain firms launching cooperation in areas of emission reduction.

We consider a supply chain with an upstream supplier who invests in innovation and a downstream manufacturer who sells to consumers. We study the impact of supply chain contracts with endogenous upstream innovation, focusing on three different contract scenarios: (i) a wholesale price contract, (ii) a quality‐dependent wholesale price contract, and (iii) a revenue‐sharing contract. We confirm that the revenue‐sharing contract can coordinate supply chain decisions including the innovation investment, whereas the other two contracts may result in underinvestment in innovation. However, the downstream manufacturer does not always prefer the revenue‐sharing contract; the manufacturer's profit can be higher with a quality‐dependent wholesale price contract than with a revenue‐sharing contract, specifically when the upstream supplier's innovation cost is low. We then extend our model to incorporate upstream competition between suppliers. By inviting upstream competition, with the wholesale price contract, the manufacturer can increase his profit substantially. Furthermore, under upstream competition, the revenue‐sharing contract coordinates the supply chain, and results in an optimal contract form for the manufacturer when suppliers are symmetric. We also analyze the case of complementary components suppliers, and show that most of our results are robust.

Newsvendor model for a dyadic supply chain with push-pull strategy under shareholding and risk aversion

Green supply chain management under capital constraint

PurposeSupply chain management is one of the most important areas for competitiveness and growth of industries. Small and medium enterprises (SMEs) in India and other developing countries face problems in coordinating their supply chain due to lack of resources and improper directions. The purpose of this paper is to develop a framework for improving the coordination in supply chain and development of an index for coordination.Design/methodology/approachThe interpretive structural modelling (ISM) approach has been employed to develop the structural relationship among different factors of coordination and responsiveness in supply chain to take strategic decisions. This framework is also used to evaluate coordination index for an organization. It has been further illustrated with the help of a case study.FindingsIn total, 32 enablers for coordination in a supply chain have been identified based on literature review. These are further grouped into six categories such as top management commitment, organizational factors, mutual understanding, flow of information, relationship and decision making and responsiveness. It is observed that all of these factors have strong mutual linkage and top management commitment is a major driver for improving the coordination among these factors.Research limitations/implicationsAs ISM methodology is based on experts' opinion, this framework needs further validation with empirical data and detailed case studies.Originality/valueThis paper has explored major factors for coordination in supply chain. It will be of great value for SMEs in developing their strategies for coordination in supply chain. The coordination index evaluated in this paper will also help them in benchmarking their performance in terms of different attributes of supply chain.

Within the low-carbon supply chain network, variations in carbon emission reduction investment costs and product exhibition expenses among members at the same level can lead to distinct competitive behaviours. This study investigates the production decision of a supply chain operating within the framework of both green financing and a carbon cap-and-trade program. The manufacturer faces capital limitations and yield uncertainty. Green financing involves government subsidies on interest for low-carbon investment loans, while low-carbon subsidies are granted based on the manufacturer's carbon emission reductions. Our study investigates the effects of the green finance mechanism, carbon cap-and-trade scheme, and yield uncertainty on emission reduction decisions. This research illustrates the green finance subsidy with the low-carbon subsidy scheme. Additionally, we have analysed optimal production quantity and carbon emission levels in decentralised decision-making scenarios and extended our findings to joint supplier-manufacturer coalition contracts. Our findings demonstrate that both the green finance subsidy and the low-carbon subsidy contribute positively to reducing carbon emissions, while yield uncertainty exerts a negative influence. Additionally, risk-averse flexibility negatively impacts utility, while the joint coalition model guides decentralised decisions. Finally, managerial insights regarding supply chain profitability have been illustrated through green finance and the cap-and-trade system.