The Low-Carbon Supply Chain Coordination Problem with Consumers’ Low-Carbon Preference

Dan Wu,Yuxiang Yang

doi:10.3390/su12093591

Abstract

In this paper, we study the supply chain coordination problem between a manufacturer and a retailer regarding consumers’ low-carbon preferences. The retailer considers the market demand to determine the order quantity; the manufacturer chooses how to reduce emissions according to the retailer’s order quantity. We consider four cases, including the non-emission abatement, the emission abatement of decentralized decision-making, the centralized decision-making and the retailer providing a cost-sharing contract. By comparing the four cases, we find that the case of a retailer providing a cost-sharing contract can coordinate the supply chain, achieving a Pareto improvement for the manufacturer and retailer. In addition, we use the Rubinstein bargaining model to determine the cost-sharing ratio. Finally, numerical simulations are given to analyze the impact of the cost-sharing ratio on the equilibrium results, including the profit and the emission abatement level. Furthermore, we investigate the impact of the cost-sharing ratio and consumers’ low-carbon awareness on the profits of the members in the supply chain. We find that the equilibrium results, including the order quantity, the emission abatement level and the profits of the members in the supply chain under contract, are higher than the ones under centralized decision-making. The results show that in the higher low-carbon awareness market, retailers should formulate a reasonable cost-sharing ratio to achieve emission reduction coordination.

Highlights

The rapid development of science and technology has changed the original life mode of human beings
The carbon trading policy is considered as an effective measure [1]; it provides for an authority to allocate free carbon emission quotas to enterprises and allows them to trade freely in the carbon market
We find that the increase in the manufacturer’s emission reduction level will lead to the increase of order quantity, so retailers should cooperate with the manufacturer to reduce emissions and bear a certain proportion of the emission reduction costs

Summary

Introduction

The rapid development of science and technology has changed the original life mode of human beings. Reducing carbon emissions can achieve the goal of environmental protection, which is an important part of sustainable development. It is urgent to reduce carbon emissions and develop sustainable production practices. The carbon trading policy is considered as an effective measure [1]; it provides for an authority to allocate free carbon emission quotas to enterprises and allows them to trade freely in the carbon market. If the enterprise’s carbon emissions exceed the quota, it can purchase additional carbon quota in the market. If the enterprise’s carbon emissions are less than the carbon quota, the remaining carbon quota can be sold to other enterprises [2]. The advantage of the policy is that it allows some enterprises to reduce their carbon emissions more economically than others [3]

Objectives

Discussion

Conclusion