Purpose The authors consider a dynamic emission-reduction technology investment decision-making problem for an emission-dependent dyadic supply chain consists of a manufacturer and a retailer under subsidy policy for carbon emission reduction. The consumers are assumed to prefer to low-carbon products and formulate a supply chain optimal control problem. Design/methodology/approach The authors adopt differential game to analyze investment strategies of cost subsidy coefficient with respect to vertical incentive of a manufacturer and a retailer. A comparison analysis under four different decision-making situations, including decentralized decision-making, centralized decision-making, maximizing social welfare, is obtained. Findings The results show that the economic benefit and environmental pressure have a win–win performance in centralized decision-making. In four different game models, equilibrium strategies, profits and social welfare show changing diversity and have a consistent development trend as time goes on. Research limitations/implications The authors estimate the demand function is a linear function in this paper. According to the consumers’ preference to low-carbon products, consumer’s awareness meets the law of diminishing marginal utility like advertising goodwill accumulation. The carbon-sensitive coefficient might be a quadratic expression, which will complicate the problem and be consistent with reality. Practical implications It captures that there is a necessity to strengthen cooperation and exchange of carbon emission technology among the enterprises by simulation of different decision-makings when government granted cost subsidy. Social implications The results provide significant guidelines for the supply chain to make decision-makings of emission-reduction technology investment and relevant government departments to determine emission subsidies costs. Originality/value An endogenous subsidies coefficient is produced by the social welfare function. Distinguished from previous study, it also considered the influences of carbon emission trade policy and consumer preference.
Climate change and greenhouse gas emission reduction have become common concerns. Carbon trading systems and low-carbon cost subsidies are important emission reduction measures. Impacts of a combination of the two policies on micro-supply chain emission-reduction technology investment have become a focal research area. This paper: (1) constructs an investment game model based on cost-sharing coordination under a cost subsidy between manufacturers and retailers; (2) examines the equilibrium strategy and optimal results according to the interests and game relationships of each stakeholder; and (3) explores the effectiveness of supply chain enterprise behavior based on cost-sharing coordination under the cost subsidy. This paper uses a numerical simulation method to compare the path evolution under different scenarios and to analyze the sensitivity of parameters, identifying the influence of various parameters on the general structure and pathways. The study finds that the cost subsidy policy has a regulatory effect on enterprise emission reduction investment and enterprise profit under a carbon trading system, and the difference caused by the regulation effect is enhanced over time. The study also shows that the dynamic path of each parameter strengthens over time.
Climate change has become a pressing concern in recent decades, and the reduction of greenhouse gas emissions is now recognised as an important strategy for redressing that concern. The carbon trading system and the provision of low-carbon cost subsidies are essential measures for reducing emissions in various countries and regions. In this context, we study the investment decision of emission reduction technology in a supply chain composed of a leading manufacturer and a following retailer under the cost subsidy policy of carbon emission reduction. We consider consumers’ low-carbon preferences and utilise differential game theory and dynamic optimisation technology to construct the investment game model under a cost subsidy policy affecting manufacturers and retailers. We then identify the equilibrium strategy and the evolution path of emission reduction, profit, and social welfare according to the interest’s composition and game relationship of each stakeholder. We also use numerical simulation method to analyse the evolution path of the system and the sensitivity of related parameters, so as to determine the influence of related parameters on the structure and path of the system. We conclude that under the current carbon trading system, the cost subsidy policy implemented by the government plays a positive role in promoting emission reduction investment and corporate profits of supply-chain-related enterprises.
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