Low-Carbon Manufacturing or Not? Equilibrium Decisions for Capital-Constrained News Vendors with Subsidy and Carbon Tax

Abstract

At a time when low-carbon life has become an important global issue, the decarbonization of manufacturing enterprises cannot be delayed in the face of the government’s green policy and other objective conditions. Under these circumstances, how to arrange the production plan before and after the implication of low-carbon policies is an urgent issue to be settled, especially for the capital-constrained news vendors. To address these problems, this paper firstly builds a stylized supply chain model consisting of two different types of manufacturers (i.e., low-carbon type and traditional type) with capital constraints, then obtains equilibrium production and business strategies resorting to Stackelberg game theory, and lastly conducts an analysis of how the key factors affect manufacturers’ green transition decisions under different scenarios of carbon policy. With the study’s structure, some interesting and important results and managerial insights are derived. For example, but not limited to, it is found that: (i) compared with traditional products, the price fluctuation of low-carbon products is greater than that of traditional products with the increase in consumers’ low-carbon awareness. And consumers have more tolerance for price increases for low-carbon products. (ii) When producing low-carbon products is cost-effective, it is a wise choice to produce more low-carbon products. When producing low-carbon items is costly, producing more low-carbon products is still a dominant strategy until the expenditure difference between low-carbon and traditional ones exceeds a certain threshold. (iii) When the expenditure on low-carbon production is moderate, the manufacturer first prefers the traditional strategy, then the low-carbon one, with an increase in consumers’ low-carbon awareness. When the expenditure on low-carbon production stays at a low or high level, the low-carbon strategy always dominates the traditional one with a certain condition satisfied. This study can enrich the theory of green supply chain management and provide decision support for enterprise managers in the green transition.