1. Supply chain carbon emission reductions and coordination when consumers have a strong preference for low-carbon products
- Author
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Sajid Anwar, Yun Zhang, Mei-lian Liu, and Zong-huo Li
- Subjects
Supply chain management ,Profit (accounting) ,Health, Toxicology and Mutagenesis ,Supply chain ,chemistry.chemical_element ,General Medicine ,010501 environmental sciences ,01 natural sciences ,Pollution ,Incentive ,chemistry ,Order (exchange) ,Environmental Chemistry ,Business ,Carbon ,Preference (economics) ,Environmental degradation ,Industrial organization ,0105 earth and related environmental sciences - Abstract
Owing to the rising concerns about environmental degradation worldwide, firms in several developed and developing countries are pursuing carbon emission reduction targets. In addition, in recent years, there is evidence of a shift in consumer preferences in favour of low-carbon products. Using a theoretical model, where the shift in consumer preferences is explicitly incorporated, we evaluate the impact of carbon emission reduction cost-sharing on supply chain profit. In our model, consumers are willing to pay a higher price for low-carbon products and hence the retailer considers sharing the cost of carbon emission reduction with the manufacturer. Our model also includes a carbon trading mechanism. We identify a range of carbon emission reduction cost-sharing such that both supply chain enterprises are better-off. We find that, while achieving the aim of carbon emission reduction, consumer preference for low-carbon products can benefit both supply chain enterprises. Numerical simulations show that carbon emission reduction cost-sharing increases the retailer’s order quantity as well as the profit and hence there is an incentive for the two supply chain enterprises to cooperate.
- Published
- 2021
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