Pricing and Carbon Emission Reduction Decisions in a Supply Chain with a Risk-Averse Retailer under Carbon Tax Regulation

Climate change has caused huge negative impacts on the ecosystem. Carbon tax policy is an important regulatory means to reduce carbon emissions and mitigate climate change. Based on the carbon tax policy, this study discusses a dual-channel supply chain consisting of one manufacturer, one online retailer, and one offline retailer. Considering retailers’ bidirectional fairness concerns, the optimal carbon emission reduction strategy and the optimal pricing strategy of centralized and decentralized decision-making are discussed under consumers’ channel preference, respectively. On this basis, a coordination contract is proposed to realize the Pareto improvement of the dual-channel supply chain. We find that dual-channel retailers’ profits and prices are negatively correlated with the horizontal fairness concern coefficient and positively correlated with the vertical fairness concern coefficient. The profit of the manufacturer, the carbon emission reduction, and the bargaining power of consumers are all positively correlated with the horizontal fairness concern coefficient and negatively correlated with the vertical fairness concern coefficient. Maintaining an appropriate service level can maximize the profits of enterprises and positively affect the development of enterprises. Through the coordination contract, the supply chain can be promoted to form a win-win mode of complementary advantages.

Section: Literature Reviewmentioning

confidence: 99%

Decisions and Coordination of Dual-Channel Supply Chain considering Retailers’ Bidirectional Fairness Concerns under Carbon Tax Policy

Zhu

Ding

Guo

et al. 2022

“…Similar to [39], Proposition 4 shows that in two different decentralized decision-making modes, the retail price under the decentralized decision-making model with the participation of risk-averse manufacturers is lower than that with the participation of risk-neutral manufacturers. e manufacturer's risk aversion is bound to affect downstream companies in the supply chain, which makes retailers make more conservative decisions, adopt a strategy of small profits but with quick turnover to meet the manufacturer's risk aversion attributes.…”

Section: Corollary 1 Under the Manufacturer's Decentralized Risk Aversion Decision-making Model The Retail Price Of Products Decreases Asmentioning

confidence: 65%

“…e manufacturer's risk aversion is bound to affect downstream companies in the supply chain, which makes retailers make more conservative decisions, adopt a strategy of small profits but with quick turnover to meet the manufacturer's risk aversion attributes. In contrast to [39], under the two decision-making models, the wholesale price determined by the manufacturer is determined by the carbon tax rate; when the carbon tax rate is low, the wholesale price determined by risk-averse manufacturers is lower than that determined by riskneutral manufacturers; when the carbon tax rate is high, the wholesale price determined by risk-averse manufacturers is higher than that determined by risk-neutral manufacturers. Similar to [40], Corollary 1 indicates that the retail price and wholesale price of low-carbon products are affected by the manufacturer's risk aversion coefficient.…”

Section: Corollary 1 Under the Manufacturer's Decentralized Risk Aversion Decision-making Model The Retail Price Of Products Decreases Asmentioning

confidence: 89%

Pricing and Coordination Decisions in a Low-Carbon Supply Chain with Risk Aversion under a Carbon Tax

Shi

Liu

2022

Under a carbon tax, with the constraint of carbon emissions reduction, by establishing game theoretical models for a low-carbon supply chain, the article investigates how the carbon tax rate and risk aversion degree may affect retail price, product carbon emission degree, and profits of the manufacturer, the retailer, and the entire supply chain. The results show that product carbon emission degree and supply chain profit in a centralized supply chain are higher than those in a decentralized supply chain. With a risk-averse manufacturer, the product’s carbon emission degree and supply chain profit will further decrease. With increased risk aversion, the manufacturer's profit and total channel profit will decrease, but the retailer's profit will be affected by the carbon tax rate. Carbon reduction investment cost-sharing contracts can contribute to the implementation of increased demand for low-carbon products and decreased retail prices. Regardless of whether the manufacturer is risk-averse, a carbon reduction investment cost-sharing contract can increase the overall efficiency and profit of the supply chain. Finally, the results are verified by numerical examples.

“…From the point of view of pricing and production decisions, Xu et al [12,13] explored the joint production and pricing problem of the supply chain with the cap-and-trade regulation. Feng et al [14] studied the influence of the government's carbon tax policy and the retailer's risk-averse attitude on optimal pricing and carbonemission reduction decisions of the supply chain. Du et al [15] explored the impacts of the carbon footprint and lowcarbon preference on the manufacturer's production strategy under the cap-and-trade regulation.…”

Section: Low-carbon Supply Chainmentioning

confidence: 99%

“…If carbon emissions exceed (are below) the manufacturer's carbon cap, she can buy (sell) carbon emission quotas in the carbon market at a carbon-trading price per unit product of t. e manufacturer can choose to invest in carbon-emission reduction technology or project; we use e to represent the level of carbonemission reduction per unit product of the manufacturer. After making efforts to reduce carbon emissions, the corresponding cost is (1/2)ke 2 , where k is a constant, which is called the carbon emission cost coefficient [12,14,18,21]. e retailer's internal working capital is η.…”

Section: Model Description and Notationsmentioning

confidence: 99%

Optimal Operation Strategies under a Carbon Cap-and-Trade Mechanism: A Capital-Constrained Supply Chain Incorporating Risk Aversion

Liu

Jiang

et al. 2020

Many small and medium enterprises (SMEs) with capital constraints often have no access or find it costly to obtain a loan from a bank; the retailer tends to borrow money from other enterprises in the supply chain by trade credit financing. We consider an emission-dependent supply chain with one emission-dependent manufacturer and one capital-constrained retailer in need of financing to explore the optimal operational and environmental strategies of a low-carbon supply chain under trade credit financing. We use a Stackelberg game model to depict the low-carbon supply chain. We analyse the optimal carbon-emission reduction effort, wholesale price, and order quantity in the equilibrium state. The impacts of key parameters, such as the retailer’s internal working capital, the manufacturer’s risk-aversion degree, and the carbon-trading price on the supply chain operation, are analysed. The results show that the retailer’s capital constraint causes the carbon-emission reduction effort, wholesale price, and order quantity to improve synchronously. The supply chain achieves a win-win outcome for both the manufacturer and the retailer when the capital-constrained retailer is funded via trade credit from the manufacturer. The in-depth development of financing is beneficial to the manufacturer but is a disadvantage for the retailer. When the initial carbon-emission quota is low, the manufacturer benefits from a relatively lower carbon-trading price. Otherwise, a higher carbon-trading price is better for the manufacturer. The “carbon-trading price trap” ensures that the retailer’s profit is minimal. We further investigate the scenario in which the manufacturer is risk averse and find that the retailer will purchase fewer products and that the manufacturer will gain less profit to decrease the carbon-emission reduction effort. The manufacturer’s risk aversion is unfavourable to both the economic and environmental outcomes of the whole supply chain. This research provides strategic support for a low-carbon supply chain to carry out operational decisions in the context of enterprise capital constraint. To examine the theoretical results, the data used in the existing literature are further used to simulate the corresponding conclusions. Our research enriches the existing supply chain finance literature and provides decision support for the supply chain core enterprise.