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Supply Chain Emission Reduction and Financing Decisions under Carbon Cap Regulation with Government Subsidies

In: Proceedings of the 2026 4th International Conference on Digital Economy and Management Science (CDEMS 2026)

Author

Listed:
  • Zongqiu Zhang

    (Suzhou University of Science and Technology, School of Business)

  • Junping Shao

    (Suzhou University of Science and Technology, School of Business)

  • Yanan Sun

    (Anwood Logistics System Co, Ltd)

Abstract

This paper studies a low-carbon supply chain with a capital-constrained manufacturer and a retailer. Under a carbon cap, we examine how credit and product subsidies affect emission reduction and financing decisions. Four game models are constructed and solved using KKT conditions for green credit and advance payment financing. The impacts of carbon cap, subsidies, and consumer low-carbon preference on supply chain decisions are analyzed. The main findings are as follows. (1) Two emission constraint scenarios exist: stringent (mandatory) and lenient (achievable via internal decisions). (2) Consumer low-carbon preference and subsidy levels are key factors affecting the carbon cap and emission reduction. (3) Both subsidies positively affect supply chain decisions and social welfare, with stronger effects under advance payment financing. (4) Advance payment financing is always the manufacturer’s preferred strategy.

Suggested Citation

  • Zongqiu Zhang & Junping Shao & Yanan Sun, 2026. "Supply Chain Emission Reduction and Financing Decisions under Carbon Cap Regulation with Government Subsidies," Advances in Economics, Business and Management Research, in: Toh Guat Guan & Abdelhak Senadjki & Thippa Reddy Gadekallu & Alex Mathew (ed.), Proceedings of the 2026 4th International Conference on Digital Economy and Management Science (CDEMS 2026), pages 341-354, Springer.
    • Handle: RePEc:spr:advbcp:978-94-6239-699-9_36
    DOI: 10.2991/978-94-6239-699-9_36
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