Which Is the Best Supply Chain Policy: Carbon Tax, or a Low-Carbon Subsidy?

Abstract

The low-carbon supply chain is key to promoting sustainable development and solving environmental pollution. Government policies related to lowering carbon emissions deeply affect supply chains. This paper builds a supply chain decision-making model under three different regulatory policies: a pure carbon tax, a pure low-carbon subsidy, and a mixed policy with both a carbon tax and a low-carbon subsidy, then compares and analyzes the impacts of these three different regulatory policies on carbon emissions, manufacturer and retailer income, and marginal profit in order to determine the best course of action with respect to supply chain decision-making. Our results indicate that the supply chain decision-making model under the mixed carbon tax and low-carbon subsidy policy results in a unique Nash equilibrium solution between the retailer subsidy rate and the manufacturing carbon reduction rate in a non-cooperative game. Although a carbon tax is beneficial to the ecological environment, retailer income increases slightly as the carbon tax coefficient increases before declining rapidly. Manufacturer income has a negative linear relationship with carbon tax, and an excessive amount of carbon tax increases the burden on companies. Therefore, the government must establish reasonable standards for carbon tax collection while offering moderate low-carbon subsidies at the same time as a means of optimizing social welfare.

Learning of Supply Chain Cost-Revenue Sharing Contract in the Form of Trade-off Mechanism in Pollution Control Problem

“…The customer with awareness of low-carbon consumption prefers to buy the products from environment-friendly parties and this change motivates the rest of members in the supply chain to promote the green activity programs. We observe that lot of literature (Wang et al, 2019, De Giovanni and Zaccour, 2013, Ji et al, 2017, Wu et al, 2022 are concentrating on the interaction between two prominent supply chain members -manufactures and retailers. One possible reason is that these two members are of larger importance in steering the economic activities.…”

“…There is also a description about duel channel supply chain (Ji et al, 2017) in which the products can be brought to the market through online and retailer two channels taking into account the current growth of e-commerce. Moreover, on the basis of these models, the constraints or policies which the supply chain is utilized to accomplish the green upgrade can be diverse, such as carbon tax (Wang et al, 2019, Wu et al, 2022, cap-and-trade (Ghosh et al, 2020, Zhang et al, 2021, green supply chain management (Herrmann et al, 2021, Zhao et al, 2012, consumers' low-carbon preference (Ghosh et al, 2020, Ji et al, 2017, Wang et al, 2019, Ye et al, 2017, lowcarbon subsidy (Wu et al, 2022, Zhu et al, 2011, green activity program and contract design (De Giovanni and Zaccour, 2013). The trade-off mechanism designed in (Su and Parilina, 2023) is exactly learning from contract design, in which the retailer share the manufacturer's sales profit and the cost of green activities.…”

Green Closed-Loop Supply Chain Networks’ Response to Various Carbon Policies during COVID-19

“…The carbon cap-and-trade model created by Wu et al accounts for product inventory and routing considerations. The model can reduce carbon dioxide emissions and operational costs [74].…”

Regional Differences and Convergence of Carbon Emissions Intensity in Cities along the Yellow River Basin in China

“…Additionally, some existing studies have focused on the influencing factors of carbon emissions [17][18][19][20], and the assessment of carbon emission policy effects. The main research components among these policy effects include the policy effectiveness of carbon trading [21], the impacts of the carbon tax on carbon emissions [22,23], and the response to the low-carbon city pilot policy on urban land use efficiency [24]. Since the ecological protection and high-quality development of the YRB have become a national strategy, many other scholars have narrowed the research scope to the YRB.…”