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Ex-ante or ex-post tax for supply chain carbon reduction under digital transformation

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  • Wang, Yangyang
  • Fang, Lan

Abstract

Reducing carbon emissions in the context of digital transformation is of significant theoretical and practical importance. However, the development of technologies to reduce carbon emissions is still in the exploratory stage. This paper examines the mechanisms and effects of digitalization and abatement policies by exploring two regulatory approaches to taxing emissions: ex-ante tax based on commitment and ex-post tax without commitment. Using the Stackelberg game analysis method, this study examines the optimal strategies for reducing carbon emissions and implementing digital transformation within firm. The environmental performance of these policies is analyzed and compared. The results show that, (1) the choice between an ex-ante or ex-post tax by the regulator does not impact the overall level of carbon abatement in the long run, but it does determine how a firm chooses to invest in abatement during the current period. Specifically, under an ex-ante tax, firms invest more in abatement during the first phase, whereas under an ex-post tax, firm abate less in the first phase. (2) Ex-post tax can lead to better outcomes in terms of digital transformation, firm profits, sales prices, and social welfare. (3) The cross-fertilisation of carbon reduction and digital technologies is mutually reinforcing.

Suggested Citation

  • Wang, Yangyang & Fang, Lan, 2026. "Ex-ante or ex-post tax for supply chain carbon reduction under digital transformation," Research in Economics, Elsevier, vol. 80(2).
    • Handle: RePEc:eee:reecon:v:80:y:2026:i:2:s1090944326000207
    DOI: 10.1016/j.rie.2026.101132
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