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Cost-Sharing Mechanisms for A Wood Forest Product Supply Chain under Carbon Cap-and-Trade

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  • Mingjun Sun

    (College of Economics and Management, Nanjing Forestry University, Nanjing 210037, China)

  • Hongjun Peng

    (College of Economics and Management, Nanjing Forestry University, Nanjing 210037, China)

  • Shuai Wang

    (College of Economics and Management, Nanjing Forestry University, Nanjing 210037, China)

Abstract

We consider a wood forest product supply chain consisting of a forestry company and a wood forest products manufacturer, where the forestry company produces timber and forestry carbon sinks, and the manufacturer consumes timber and carbon emission rights. A Stackelberg model is adopted to investigate the forest scale and carbon emission reduction decisions of the supply chain. We design and analyze the carbon emission reduction cost-sharing (ERCS) mechanism and carbon sink cost-sharing (SCS) mechanism, respectively. The result shows that both contracts can help the wood forest product supply chain to achieve higher profits. The ERCS mechanism may encourage the manufacturer to increase emission reduction level and the forestry company to expand the forest scale. The SCS mechanism is beneficial to the expansion of carbon sink forests; however, it may lead to the manufacturer decreasing investment in carbon emission reduction measures.

Suggested Citation

  • Mingjun Sun & Hongjun Peng & Shuai Wang, 2018. "Cost-Sharing Mechanisms for A Wood Forest Product Supply Chain under Carbon Cap-and-Trade," Sustainability, MDPI, vol. 10(12), pages 1-19, November.
    • Handle: RePEc:gam:jsusta:v:10:y:2018:i:12:p:4345-:d:184734
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    References listed on IDEAS

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    Cited by:

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    3. Xinyue Yang & Ye Song & Mingjun Sun & Hongjun Peng, 2020. "Strategies for Capital Constrained Timber and Carbon Sink Supply Chain under the Cap-and-Trade Scheme," Sustainability, MDPI, vol. 12(11), pages 1-15, May.
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