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Impact of Carbon Transfer and Low Carbon Preferences on Firm Decision Making Under Two Power Structures

Author

Listed:
  • Feng Xue

    (School of Mathematics, Chengdu Normal University, Chengdu 611130, China)

  • Zishan Liao

    (School of Mathematics, Chengdu Normal University, Chengdu 611130, China)

  • Qian Qian

    (School of Business, Sichuan Normal University, Chengdu 610101, China)

  • Zhenggang Jiao

    (School of Mathematics, Chengdu Normal University, Chengdu 611130, China)

Abstract

The dynamics of carbon transfer and shifting consumer preferences toward low-carbon products significantly influence firms’ strategic choices and accelerate their transition to greener practices. This study models a secondary supply chain involving a supplier, a high-carbon manufacturer, and a low-carbon manufacturer, analyzing equilibrium outcomes for pricing and profit under two power structures: one where the high-carbon manufacturer holds greater influence, and another where both manufacturers have equal power. Numerical simulations are used to examine how carbon transfer and consumer preferences shape pricing, profitability, and strategic responses across the supply chain. The results show that high-carbon manufacturers with greater market power raise prices to offset the cost of carbon, while those with equal power are more constrained by competition and have to track market dynamics in pricing. Low-carbon manufacturers, more sensitive to consumer preferences, benefit from rising demand, gaining pricing power and sales, while high-carbon manufacturers need to raise prices initially and then gradually reduce them. Although increased carbon transfers offer high-carbon manufacturers greater strategic flexibility, they raise supplier costs and prices for high-carbon products, with limited effect on low-carbon manufacturers.

Suggested Citation

  • Feng Xue & Zishan Liao & Qian Qian & Zhenggang Jiao, 2025. "Impact of Carbon Transfer and Low Carbon Preferences on Firm Decision Making Under Two Power Structures," Sustainability, MDPI, vol. 17(11), pages 1-27, May.
  • Handle: RePEc:gam:jsusta:v:17:y:2025:i:11:p:4956-:d:1666410
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    References listed on IDEAS

    as
    1. Licheng Sun & Sui Fang, 2022. "Irrational Carbon Emission Transfers in Supply Chains under Environmental Regulation: Identification and Optimization," Sustainability, MDPI, vol. 14(3), pages 1-20, January.
    2. Xiaowan Yang & Xiaoyu Guo & Yanan Wang, 2023. "Characteristics of Carbon Emission Transfer under Carbon Neutrality and Carbon Peaking Background and the Impact of Environmental Policies and Regulations on It," Sustainability, MDPI, vol. 15(9), pages 1-20, May.
    3. Biying Zhao & Licheng Sun & Siying Gao, 2022. "Effects of Government Regulations on Under-Reporting of Carbon Emission Transfers by Enterprises in Supply Chains," Sustainability, MDPI, vol. 14(15), pages 1-24, July.
    4. Niamir, Leila & Filatova, Tatiana & Voinov, Alexey & Bressers, Hans, 2018. "Transition to low-carbon economy: Assessing cumulative impacts of individual behavioral changes," Energy Policy, Elsevier, vol. 118(C), pages 325-345.
    5. Lee, Eunji & Minner, Stefan, 2024. "How power structure and markup schemes impact supply chain channel efficiency under price-dependent stochastic demand," European Journal of Operational Research, Elsevier, vol. 318(1), pages 297-309.
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