Low-Carbon Transition Models of High Carbon Supply Chains under the Mixed Carbon Cap-and-Trade and Carbon Tax Policy in the Carbon Neutrality Era

Abstract

To achieve the goals of carbon peak and carbon neutrality, the low-carbon transformation (LCT) of high-carbon firms is inevitable. We construct game models of a supply chain with different dominant types under a mixed carbon policy that embraces carbon cap-and-trade and carbon tax. Solving each dominant model, we derive the effective area and optimal threshold of the mixed carbon policy to guide LCT. We find that the selling price, market demand, and profit of the supply chain system are equal in different dominant models due to the mixed carbon policy, but when a company dominates the supply chain, its profit is higher than when it is a subordinate. In addition, the high-carbon manufacturers (HCM) will pursue LCT only when the sum of the carbon tax rates and carbon trading prices is within a certain threshold, and the subordinate HCM are more likely to be driven to pursue LCT. Therefore, the government should adopt a differentiated hybrid carbon policy, setting a high (low) carbon tax rate for the HCM in a dominant (subordinate) position.

Dual Carbon Goal-Based Quadrilateral Evolutionary Game: Study on the New Energy Vehicle Industry in China

“…The other three participants’ positive reactions to government incentives forms the short term sub-evolutionary path . This confirms the findings in the literature [ 45 , 48 , 55 , 73 ]. The remaining sub-evolutionary path corroborates that incentives are unsustainable in the long run.…”

“…Chen et al discuss the effect of a carbon emission trading system (ETS) using the Differences-in-Differences method (DID) and find that ETS has regional heterogeneity [ 44 ]. Meanwhile, Shen, Lin and Cheng explore the impact of a mixed incentive policy of carbon tax and carbon trading on a firm’s low carbon transition [ 45 ]. Carbon emissions trading is a market-based instrument.…”

The impact of carbon neutrality policies on the stock market from a supply chain perspective

“…According to the institutional theory, carbon neutrality policies represent institutional pressure from governments and act as influential drivers for firm behavior and performance. In terms of supply chain decision making, Shen et al. (2022) studied a supply chain game model with different mixed carbon policies to analyze the conditions for firms embarking on a low-carbon transition.…”

“…According to the institutional theory, carbon neutrality policies represent institutional pressure from governments and act as influential drivers for firm behavior and performance. In terms of supply chain decision making, Shen et al (2022) studied a supply chain game model with different mixed carbon policies to analyze the conditions for firms embarking on a low-carbon transition. Bai et al (2022) factored carbon neutrality policies into the supplier selection and order allocation issues and considered both procurement quantity maximization, procurement cost minimization and investment cost minimization in their decision making.…”

Advancing ‘Net Zero Competition’ in Asia-Pacific under a dynamic era: a comparative study on the carbon neutrality policy toolkit in Japan, Singapore and Hong Kong

“…Thus, the evaluation of the policy mix is crucial in addressing these challenges and in achieving the desired outcomes of promoting sustainable technologies and facilitating the transition to a carbon-neutral economy. The result shows that most of them (74) concentrated on the effectiveness of particular types of policy instruments, for example, tested carbon tax (Cheng et al, 2021a;Shen et al, 2022;Tao et al, 2021;Wang et al, 2022b), carbon trading system (Can et al, 2021;Gao et al, 2022;Zhou, 2022), public investment (Cai et al, 2021;Cheng et al, 2021b;Udemba & Philip, 2022), etc. tools in fostering private sector involvement, expansion of money flow, renewable technological innovation, etc., which are supposed to have a positive influence on carbon reduction.…”