Abstract
Under the threat of global warming, joint emission reduction strategy has been widely adopted as an effective solution for the industry to guarantee environmental sustainability. In the practice of supply chain, environmental regulations and supply chain contracts are applied with the attempt to improve environmental performance. However, whether these measures are actually effective remains unanswered. In this paper, we study a supply chain with one manufacturer and one retailer adopting joint emission reduction strategy. We first investigate under what circumstance the environmental regulation can effectively result in higher emission reduction efforts. The result shows that when the cost coefficient satisfies certain conditions, the increase of penalty or subsidy can lead to more investment in emission reduction. In addition, if the environmental impact caused by the production process is extremely high, the enforcement of the regulation is ineffective. We also explore how the cost-revenue-sharing contract affects the emission reduction strategy and the coordination of the members in the supply chain. The results suggest that the incentive effect of environmental regulation is more effective when the supply chain coordination contract exists. Numerical experiments are also presented to verify our analytical conclusions.
Highlights
Since global warming became a significant threat to human beings, emission reduction has obtained great attention from governments, industries, and consumers all over the world
In this paper, assuming that the consumers have low-carbon preference, we investigate the effect of environmental regulation on joint emission reduction strategies and contract design decisions in a two-echelon supply chain
Based on the literature above, we investigate the effect of environmental regulation on joint emission reduction strategy under several contracts, and whether the regulation can achieve Pareto improvement for the overall performance
Summary
Since global warming became a significant threat to human beings, emission reduction has obtained great attention from governments, industries, and consumers all over the world. Research by Accenture demonstrates that more than 80% of the interviewees consider the green level (i.e., the more efforts to reduce emissions, the higher the green level) of the product when making purchasing decisions, and they are willing to pay a higher price for the green products with lower emission [6] Given this feature of the consumer market, the joint emission reduction strategy has been widely adopted as an effective solution for enterprises to guarantee environmental sustainability [7]. To investigate the effect of environmental regulation on joint emission strategy, we compare the decisions of members in the decentralized and centralized supply chain models with and without the Sustainability 2020, 12, 0 regulation.
Sign-in/Register to view highlights & summary Sign-in/Register to access full text options 
Talk to us
Join us for a 30 min session where you can share your feedback and ask us any queries you have
Schedule a callDisclaimer: All third-party content on this website/platform is and will remain the property of their respective owners and is provided on "as is" basis without any warranties, express or implied. Use of third-party content does not indicate any affiliation, sponsorship with or endorsement by them. Any references to third-party content is to identify the corresponding services and shall be considered fair use under The CopyrightLaw.
