Price and carbon emission decisions under pressures of consumer, regulator and competition

Abstract

This paper examines the impacts of consumer environmental awareness, carbon emission tax and competition on the firms' economic and environmental performance. We find that both in the single-channel supply chain and dual-channel supply chain, the manufacturer in a 'clean' industry invests to reduce the amount of carbon emissions per unit of product produced actively; however, the manufacturer in a 'dirty' industry is expected to reject the environmental investment. The retailer is always better off with a higher consumer environmental awareness or a higher carbon emission tax in a 'clean' industry, but worse off in a 'dirty' industry. The manufacturer is better off with a higher consumer environmental awareness or a higher carbon emission tax if and only if she is in a 'dirty' industry and in the dual-channel supply chain. The numerical examples present the condition which secures Pareto gains after the manufacturer encroaches.