Optimal strategies for capital constrained low-carbon supply chains under yield uncertainty

Abstract

We investigate the optimal strategies for a capital constrained low-carbon supply chain with uncertain yield, with the features of green finance and carbon cap-and-trade scheme. The results indicate that the green finance subsidy and the low-carbon subsidy have positive impacts on the carbon emission reduction, but the yield uncertainty has negative impacts. For manufacturers with low initial emission level, the green finance subsidy is more efficient than the low-carbon subsidy. However, for manufacturers with high initial emission level, the low-carbon subsidy is more effective than the green finance subsidy. Further analysis indicates that green finance can increase the positive effects of the carbon cap-and-trade scheme on manufacturers with medium or low emission levels, but the yield uncertainty can decrease the positive effects. For high emission manufacturers, with green finance, the cap-and-trade can have more negative effects on the investment in carbon emission reduction, and with the yield uncertainty, the cap-and-trade can have less negative effects on the manufacturers’ carbon emission reduction.