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In-house production and outsourcing under different emissions reduction regulations: An equilibrium decision model for global supply chains

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  • Yang, Yuxiang
  • Goodarzi, Shadi
  • Jabbarzadeh, Armin
  • Fahimnia, Behnam

Abstract

A primary dilemma for multinational firms facing different emissions reduction regulations is determining what to produce in-house and what to outsource. We study a supply chain with manufacturers and overseas suppliers each facing different carbon tax rates. We present an in-house production and outsourcing equilibrium decision model as well as a modified projection algorithm for this supply chain. Numerical examples focus on examining how carbon tax rates and consumer’s carbon awareness affect in-house production and outsourcing decisions. Analysis of the numerical results provides important managerial insights and carbon policy implications which are thoroughly discussed in this paper.

Suggested Citation

  • Yang, Yuxiang & Goodarzi, Shadi & Jabbarzadeh, Armin & Fahimnia, Behnam, 2022. "In-house production and outsourcing under different emissions reduction regulations: An equilibrium decision model for global supply chains," Transportation Research Part E: Logistics and Transportation Review, Elsevier, vol. 157(C).
    • Handle: RePEc:eee:transe:v:157:y:2022:i:c:s1366554521002106
    DOI: 10.1016/j.tre.2021.102446
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