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The need for low-carbon development has become a social consensus. Increasing numbers of enterprises implement carbon emission reduction by using carbon cap-and-trade mechanisms to cater to consumers and practice social responsibility. From the manufacturer’s perspective, they can implement carbon emission reduction investment by themselves or outsource it to the retailer or energy service company (referred as ESCO). To explore the best carbon emission reduction mode selection strategy, we built and compared three carbon emission reduction modes—manufacturer emission reduction, retailer emission reduction, and ESCO emission reduction—by using Stackelberg game models. The joint decisions of operation, finance, and environment were obtained by using the backward induction approach. The impacts of key parameters were analyzed, such as the retailer’s initial capital amount and the decision-makers’ risk aversion degree on the low carbon supply chain operation. Our results show that the optimal carbon emission reduction mode for the manufacturer is changed as the retailer’s initial capital amount changes. Carbon emission reduction by the ESCO (retailer) becomes the dominant strategy for both the economy and environment when the cost advantage (cash investment ratio) of the ESCO (retailer) carbon emission reduction mode is sufficiently high (low). Overall, decision-makers’ risk aversion is detrimental to both the economic and environmental developments of the supply chain. We also designed contracts to realize the coordination of risk-neutral, risk-averse, capital-adequate, and capital-constrained low-carbon supply chains. These results give guidance for decision-makers to better manage the low-carbon supply chain in the context of fully considering the influential factors of risk aversion and capital constraint.

Remanufacturing serves as an efficient way to achieve sustainable development and has become increasingly popular. Various types of services, such as extended warranties and full refunds, are provided to reduce consumers' concerns and promote the sale of remanufactured products. This work is motivated by the fact that consumers are risk-averse to remanufactured products and prefer new products due to quality, safety, and environmental issues. Taking into account the risk-averse consumers, we

Traditional wisdom claims that remanufacturing operations always benefit the manufacturer in monopolistic cases and hurt the supplier in a supply chain system. However, we show that this claim does not hold when firms face a mature market. In particular, we consider a case in which some consumers in the market possess old products before the selling season, i.e., some consumers are holders. A monopolistic manufacturer collects used products from holders and then sells the products to non-holders after furbishing and remanufacturing. In the integrated case, the manufacturer performs manufacturing and remanufacturing together. We find that remanufacturing may hurt the manufacturer when the fraction of non-holders in the market and the production cost are both low. In the separated case, in which an upstream supplier provides the core component to a downstream manufacturer, the downstream manufacturer undertakes the remanufacturing operation as well as manufacturing. We find that the supplier can benefit from the manufacturer’s remanufacturing operation under a specific condition, even if the manufacturer always receives a higher profit.