Low carbon policies and coordination in dyadic supply chains

Abstract

This paper investigates low carbon policies in supply chain coordination. It discusses the effects of carbon policies on profits and coordination of a simple one-supplier-one-retailer supply chain. A model is established to illustrate the profits of supply chain and the relevant factors in four cases: not considering carbon emissions, considering carbon emissions, implementing carbon emission trading, and carbon tax combined with carbon quotas. It compares implementing carbon trading with other policies when promoting low-carbon supply chain. In addition, the impact of carbon policies on supply chain coordination is investigated. It discusses how two participants carry on the Stackelberg game where the supplier is a leader and retailer is a follower with the All-unit Wholesale Quantity Discount contract (AWQD) in four cases. The coordination conditions are obtained.