Two-stage supply chain optimization with consumers’ environmental awareness under cap-and-trade regulation

摘要

Along with the increasingly environmental pollution, a carbon emission limiting scheme is proposed in many countries. Shenzhen becomes the first urban to operate the cap-and-trade carbon emission trading scheme in China. Besides, there’re six more cities entering the CTP trading in China. This paper focuses on the optimal pricing and carbon emission strategies of the manufacturer and retailer in a supply chain containing an upstream manufacturer who produces one particular kind product and a downstream retailer. We use two-stage Stackelberg game model to show how the supply chain functions. In view of the survey collected in Berlin, willingness to pay for clear production is different between residents there. Thus, consumers’ environmental awareness is introduced. In this model, the demand quantities are decided by the consumers, and both of the manufacturer and retailer can decide their own prices and carbon improvement degrees. The consumers’ environmental awareness can positively affect the demand of eco-friendly product. The carbon emission quantities can be transacted in the market. We find that as the consumers environmental awareness strengthens, the total revenue of manufacturer and retailer will increase. Besides, as the environmental awareness or the carbon transaction cost increases under certain conditions, the total carbon emission will decrease.