Abstract
This paper investigates the issues of financing channels (bank credit financing, trade credit financing, and dual-channel financing) and carbon emission abatement in a supply chain consisting of one capital-constrained manufacturer and two capital-constrained retailers. Compared with bank credit, we find that every member can make more profit under trade credit when only one financing channel is available. When both bank credit and trade credit are available, the retailers’ financing strategy highly depends on the interest rates charged by the creditors. In addition, we also examine the impact of financing channels on emission abatement. It shows that the manufacturer reduces more carbon emissions under trade credit. Interestingly, the emission abatement has nothing to do with trade credit interest rate when retailers only adopt trade credit, whereas it is closely related to trade credit interest rate under dual-channel financing.
Highlights
Global natural disasters and extreme weather occur frequently. e frequency of floods, high temperature, drought, freezing, typhoons, and other disasters has increased significantly
We investigate the conditions under which each financing method is adopted when both financing methods are available. e findings show that, when the trade credit interest is lower than bank interest rate, the retailers borrow more money from the manufacturer instead of crediting only from the manufacturer
We consider a supply chain consisting of capital-constrained retailers, who may finance by bank credit or by trade credit
Summary
Global natural disasters and extreme weather occur frequently. e frequency of floods, high temperature, drought, freezing, typhoons, and other disasters has increased significantly. Dong et al [18] examine firms’ optimal decisions considering carbon emission abatement investment and suggest that a revenue sharing contract can coordinate a sustainable supply chain. We consider a supply chain consisting of capital-constrained retailers, who may finance by bank credit or by trade credit. Yan et al [33] examine how each party makes a decision in a supply chain with capital-constrained retailer and suggest that a partial credit guarantee is able to achieve channel coordination considering bank credit financing. Yang et al [36] show the impact of bank financing on each member’s optimal decision by establishing a supply chain comprising a supplier and two competitive retailers who borrow money from a bank. P2 (1 − v)a − q2 − φq1 + λe, v stands for retailer 1’s underlying market share, a is the potential demand of the market. φ represents the substitutability of products selling by different retailers, and a larger φ implies fierce competition in the market. λ is consumers’ price sensitivity to the emission abatement level
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