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Investment Strategy of Emission-Reduction Technology in a Supply Chain

Author

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  • Gao Xiang Lou

    (School of Business, East China University of Science and Technology, Shanghai 200237, China)

  • Hai Yang Xia

    (School of Business, East China University of Science and Technology, Shanghai 200237, China)

  • Jie Qiong Zhang

    (School of Business, East China University of Science and Technology, Shanghai 200237, China)

  • Ti Jun Fan

    (School of Business, East China University of Science and Technology, Shanghai 200237, China)

Abstract

Greenhouse gas emissions have serious impacts on the natural environment. Therefore, the restrictions imposed on carbon emission force enterprises to take carbon emission into consideration when making production decisions. In this paper, in the context of allowing emission trading and investment of emission reduction technology, models were presented for a two-stage supply chain to analyze the optimal investment and pricing decisions. The results indicate that manufacturer’s endurance capacity of reduction difficulty is higher in the cooperation model than in the Stackelberg game model, and that perfect coordination of supply chains can be realized by a revenue sharing contract. From the perspective of a consumer, low-carbon products mean higher price, so that subsidies or tax exemptions should be provided to keep low prices. Meanwhile, the government can promote investment in emission-reduction technologies and achieve its emission reduction targets by controlling emission trading price, strengthening emission reduction publicity and providing technology investment subsidies.

Suggested Citation

  • Gao Xiang Lou & Hai Yang Xia & Jie Qiong Zhang & Ti Jun Fan, 2015. "Investment Strategy of Emission-Reduction Technology in a Supply Chain," Sustainability, MDPI, vol. 7(8), pages 1-25, August.
    • Handle: RePEc:gam:jsusta:v:7:y:2015:i:8:p:10684-10708:d:53873
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    References listed on IDEAS

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