Impact of efficiency, investment, and competition on low carbon manufacturing

Abstract

Low carbon economy has become a top agenda for many countries following the agreement in the Paris meeting on climate change. In this article, we take price and emission sensitive demand into account and incorporate competition between the two rival manufacturers in the demand function. This research takes more proactive actions incorporating carbon emissions in the strategic and operational decisions, which complements the existing literature on low carbon manufacturing, in which the carbon emissions attribute is often used as a constraint, or only the single manufacturer's demand is considered. Based on game theory, the pricing and carbon emissions reduction decisions are investigated. Our study contributes to the existing literature on low carbon manufacturing by specifically examining the impact of production efficiency, carbon emissions reduction efficiency, and market power structure on achieving low carbon manufacturing. Through the systematic analysis of optimal pricing and green technology investment decisions to improve the economic and environmental performance under different market power structures, our findings provide valuable managerial implications, which will help many manufacturing firms to make important strategic and operational decisions regarding low carbon manufacturing.

The Optimal Green Product Design with Cost Constraint and Sustainable Policies for the Manufacturer

“…Basiri and Heydari investigated the optimal retailer's sales efforts and green quality and channel coordination issue within a twostage supply chain [33]. Chen et al studied the optimal prices and green technology investment when there are competitions between two manufacturers who have different green technology investment cost coefficients [3]. Liu et al investigates product design issue and its impact on the operations of a closed-loop supply chain consisting of a supplier, a manufacturer, and consumers [34].…”

“…Or else, let 3 and π * 1 − π * 2 > 0; then, the manufacturer produces one product; if c < x 3 and π * 1 − π * 2 < 0, the manufacturer produces two products. When J 1 > 0 J 2 < 0; if c < x 3 and π * 1 − π * 2 > 0; then, the manufacturer produces one product; if c > x 3 and π * 1 − π * 2 < 0, the manufacturer produces two products.…”

“…On the other hand, many environment policies imposed by governments around the world encourage the manufacturer to produce green product. Nevertheless, a transition to produce green products will require innovation and investment in a range of green technologies and radical changes to operation practices in the industry sector [3]. Green products always have higher prices than ordinary products, and traditional qualities of green products are often lower than those of ordinary products.…”

Carbon Taxes and Carbon Right Costs Analysis for the Tire Industry

“…The total cos t of carbon emissions = TR 1 W 1 + TR 2 W 2 + TR 3 W 3 This is the fifth term of Equation (1), i.e., total carbon emissions cost. The related constraints are Equations (15)- (22). In Equations (17)-(22), (n 1 , n 2 , n 3 ) is a SOS2 set of 0-1 variables, and only one and just one will be 1.…”

“…The contribution of this study is that it incorporates the cost of carbon emissions into the mathematical programming, enabling the tire industry to evaluate emissions projects. In recent years, studies on the implementation of carbon trading have provided useful insights and helped to reduce carbon emissions [21][22][23].…”