Models of the Transportation Problem under Carbon Emissions Policies

Abstract

The paper investigates the classical transportation problem under carbon emissions policies (carbon cap, carbon tax, and cap-and-trade). We develop a firm's optimal total transportation cost formulation which helps the firm to consider the impact of policies and calculate the total transport cost. We show that under carbon cap the firm must control the carbon emissions, whereas the tax imposed on the firm can effectively reduce carbon emissions by increasing the transportation cost. The firms may decide the carbon emissions regarding the true value of the freight, for high-profit goods the firm would like to absorb high tax. We also derive the conditions under which, the firm's total transportation problem is similar under the carbon cap and the cap-and-trade policies, and the transportation cost can be effectively adjusted under cap-and-trade policy. We show that, in order to reduce the transportation cost under carbon emissions policies, the firm have to choose the reasonable policies. Furthermore, more variables and ingredients should be integrated into the linear programming formulation mode for the further research.