Profit Distribution Model of Green Building Supply Chain with Fairness Preferences and Cap-and-Trade Policy

Abstract

The green building is a sustainable form of construction. Carbon emissions are one of the important criteria for measuring the green building. The cap-and-trade policy is widely used by governments as an effective emission reduction policy. Green building supply chain companies need to decide how to distribute profit under the cap-and-trade policy. At the same time, supply chain members with fairness preferences have an impact on supply chain decisions. The paper formulates the profit distribution models under the cap-and-trade policy, which are the model without considering fairness preferences and the other model considering the subcontractor cares about fairness preferences. The paper drives the optimal proportion of the profit and the unit carbon emissions in the two models. The fairness preferences degree of the subcontractor is considered to analyse the effect of fairness preferences degree on the unit carbon emissions and the profit of the supply chain. Our study also shows that subcontractors’ fairness preferences will damage the profit of the general contractor and the supply chain. So, when the general contractor chooses the subcontractor, he should try to choose the subcontractor that does not pay too much attention to fairness.