Abstract
In literature, the firm’s selection of dual-product strategy under cap-and-trade regulation and the optimal emission reduction decisions are not well studied, especially through an analytical approach. We develop a theoretic model to investigate the firm’s selection on three product strategies in the presence of cap-and-trade policy, including two single product strategies and a dual-product strategy, and identify two types of consumers: consumers with low-carbon preference and regular consumers. Our analysis shows that, (i) in the absence of cap-and-trade policy, it is optimal to adopt dual-product strategy, but in the presence of this policy, it is optimal to adopt dual-product strategy or low-carbon product strategy. (ii) Compared with ordinary product strategy, adopting a low-carbon product strategy or dual-product strategy benefits the firm under cap-and-trade regulation. (iii) The additional cost of producing low-carbon product has an impact on the firm’s product strategy selection under cap-and-trade regulation. When it falls below a certain threshold, it is optimal to adopt a dual-product strategy; otherwise, it is optimal to adopt a low-carbon product strategy. Our research can provide reference for firm’s decision-making and government’s policy formulation.
Highlights
With the deterioration of the global environment, excessive carbon emissions have attracted increasing attention
As more and more countries implement policies to motivate firms to take measures to reduce carbon emissions, many firms are faced with the problem of how to change their production strategies according to these policies, which has become a concern of many scholars
Du et al [29] examined three factors that influence firms to adopt low-carbon product strategy under cap-andtrade regulation, which include the additional cost for producing low-carbon products, consumers’ preference for low-carbon products, and carbon trading price. ey believed that the additional cost is the most important factor that affects firms to produce low-carbon products. ey concluded that even if the additional cost involved in producing low-carbon products is high, firms are likely to adopt low-carbon product strategy if consumer preference for low-carbon product is high enough. is is consistent with the conclusion of our research
Summary
With the deterioration of the global environment, excessive carbon emissions have attracted increasing attention. While all the above papers used empirical or simulation approaches to investigate various government policies’ effects on firm’s carbon emission reduction decisions, researches studying the influence of cap-and-trade policy on the product selection strategy and carbon emission reduction decisions are quite limited. It can be seen that many scholars have studied the firm’s choice of low-carbon production or green technology strategy under the influence of government policies, they did not consider the choice of dual-product product strategy under cap-and-trade regulation. We establish theoretic model to explore the firm’s optimal product strategy by considering three product strategies and two types of consumers, and, we examine the impact of cap-and-trade policy on the firm’s product strategy selection and emission reduction of product, which we believe adds a good contribution to the existing literature
Sign-in/Register to view highlights & summary Sign-in/Register to access full text options 
Free) 
Talk to us
Join us for a 30 min session where you can share your feedback and ask us any queries you have
Schedule a call
