The impact of network externalities and altruistic preferences on carbon emission reduction of low carbon supply chain

Abstract

This paper explores the manufacturer's carbon emission reduction in the presence of network externalities and altruistic preferences. Existing literature mainly analyzes the impact of government regulations and firms' behavior characteristics on manufacturers' decisions, while little literature investigates the role of network externalities and altruistic preferences in promoting carbon emission reduction of manufacturers. Our results show that network externalities and altruistic preferences are conducive to improving manufacturers' profits and carbon emission reduction levels. However, we find that manufacturers' carbon emission reductions are more likely to be optimal without network externalities and altruistic preferences when the cost of low-carbon technologies is low, and consumer preferences are high. Interestingly, when the low-carbon technologies cost is high, the combined effect of network externalities and altruistic preferences is more favorable for manufacturers to implement carbon emission reductions. However, when the cost of low-carbon technologies is moderate, we find that the combined effect of network externalities and retailers' altruistic preferences does not always increase the level of carbon emission reductions. In addition, we also find that network externalities or altruistic preferences enhance manufacturers' ability to afford the costs of low-carbon technologies, which implies that manufacturers are more inclined to reduce carbon emissions compared to scenarios without network externalities and altruistic preferences.