Inter-Organizational Control of Low-Carbon Production in a Supply Chain

Abstract

Increasing consumers' environmental awareness has drawn more firms' attention to low-carbon production. CO 2 emission management control is a critical factor in the process of low-carbon production in a supply chain. Such kind of inter-organizational control includes two different strategies: the emission control and emission reduction. Those two strategies have different influences on the performance of the supply chain. This paper uses the differential method to study the Stackelberg game between a manufacturer and a supplier in four situations: (1) the non-cooperative situation where no coordination is considered; (2) the weak incentive situation where the emission control incentive is considered; (3) the strong incentive situation where both the emission control incentive and the emission reduction incentive are considered; (4) the cooperative situation where the cooperation is considered. Optimal inter-organizational control of the emission control efforts, emission reduction efforts and cost subsidy are solved and discussed. The results show that although the emission control cost lower, its positive effect on the supply chain performance is still limited. Both the supplier and the manufacturer have the Pareto improvements from the non-cooperative situation to the cooperative situation in sequence. Finally, the simulations and sensitivity analyses are conducted to support the models. Our study provides theoretical insights to the optimal control of low-carbon production in an inter-organizational setting. INDEX TERMS Inter-organizational control, supply chain coordination, low-carbon production, differential game.

Non-Cooperative Game and Cooperative Operation of Multi-Level Supply Chain Under Background of Carbon Emission Reduction

“…(3) From the perspective of final emission reduction, the degree of effort of suppliers and manufacturers will directly affect the carbon emissions [22]. So it can be assumed that S  and M  denote the coefficient of their respective efforts on emission reduction.…”

“…According to the model of [22], a linear market demand function is assumed in our paper. There is linear relationship between the market demand and the total amount of carbon emission reduction and retailer promotion, that is, ( ( ), ( ), ( ), ( ))…”

“…Considering the carbon tax policies and government subsidies, supply chain game model is established and the contract forms and parameters are given according to coordination condition [21]. Zu et al [22] adopted the differential method to study the Stackelberg game between a manufacturer and a supplier in four situations. Especially, they provided theoretical insights to the optimal control of low-carbon production in cooperative situation.…”

“…The manufacturer M also pays attention to the emission reduction investment of supplier S and the promotion of retailer R. In the meantime, it shares a certain proportion of the costs for the upstream and downstream. The construction method refer to the References [20][21][22], [32][33][34]. Therefore, the decisions of three parties are proposed as.…”

Optimal Pricing and Carbon Emission Abatement Allocation Decisions in Supply Chains With Option Contract

“…Yang et al investigated the role of revenue sharing and first-mover advantage on manufacturer's carbon emission abatement effort and studied firms' profitability when the government imposes some carbon taxes on the manufacturer [23], and Yang and Chen expanded this research and analyzed the impact of revenue-sharing and cost-sharing contract on a manufacturer's carbon emission abatement efforts [10]. In addition to analyzing the impact of carbon tax on the optimal decisions of supply chain members, many scholars have recognized the effectiveness of cooperation among enterprises in reducing emissions and improving profits under the carbon emission regulations, e.g., Zu et al focused on the difference influence of the emission control strategy and the emission reduction strategy on the supply chain performance, and found strong incentives from the manufacturer to the supplier on both emission control and emission reduction can promote two partner firms reach maximum profit and lowest emission [24]. Therefore, a large number of studies have proposed coordination contracts to effectively allocate the cost of carbon tax among members to promote the coordination of the supply chain.…”