Profit Distribution Model for Construction Supply Chain with Cap-and-Trade Policy

Abstract

Cap-and-trade has become one of the most widely used carbon emission limitation methods in the world. Its constraints have a great impact on the carbon emission reduction decisions and production operations of supply chain enterprises, as well as profit distribution. In the construction supply chain, there are few studies on the profit distribution and emission reduction decisions considering cap-and-trade policy. This paper investigates the profit distribution model of a two-echelon construction supply chain consisting of a general contractor and a subcontractor with cap-and-trade policy. Using game theory and Shapley value method, the optimal emission reduction decisions and profit distribution under three cooperation modes of pure competition, co-opetition, and pure cooperation are obtained, respectively. The research shows that the profits of the construction supply chain are increasing in pure competition, co-opetition, and pure cooperation scenarios, and the emission reduction amount of the construction supply chain in the case of pure cooperation is greater than that of pure competition and co-opetition. The carbon emission reduction amount under the co-opetition scenario is not always greater than that under the pure competition scenario, which depends on the emission reduction cost coefficient relationship of general contractor and subcontractor. When the cost coefficient of emission reduction of the general contractor is less than that of the subcontractor, the emission reduction amount under pure competition is larger than that under co-opetition. A numerical study is carried out to verify the conclusions and illustrated the profits of the supply chain decreased with the increase of carbon emission reduction cost coefficient, and had nothing to do with the emission reduction efficiency of enterprises.

Blockchain Applications in Digital Construction Supply Chains

“…In particular, governments play a vital role in the green transformation of the building supply chain, and collaboration and integration among other stakeholders can be fostered through government incentives and penalties. Collaboration and integration between different stakeholders (Akan, Dhavale, & Sarkis, 2017;Balasubramanian & Shukla, 2018;Dallasega & Rauch, 2017;Gaur & Vazquez-Brust, 2019;Jiang, Lu, & Xu, 2019)helps to effectively implement GSCM and enhance sustainability in the CSC. Long-term collaborative collaboration among stakeholders in the CSC can significantly reduce emissions and improve the economic performance of the supply chain (Du et al, 2019;Jiang et al, 2019).…”

The Effect of Fairness Concern on Carbon Emission Reduction and Revenue Distribution in Construction Supply Chain: Power Structure Perspective

“…e distribution of emission reduction revenue will become an important issue for construction enterprises. [11] considered cap-and-trade, respectively, established the emission reduction revenue distribution model of construction supply chain under the centralized and decentralized models, and obtained the optimal distribution proportion. Most of the existing studies on fairness concerns in the construction industry do not consider cap-and-trade.…”

“…erefore, with the implementation of cap-and-trade, how to make decisions about emission reduction is an important part of the construction supply chain [10,11].…”

Carbon emission reduction and profit distribution mechanism of construction supply chain with fairness concern and cap-and-trade

“…Jiang et al (2018) focused on a two echelon supply chain consisting of a supplier and a prefabricated building manufacturer, constructed a stackelberg model and obtained the optimal pricing and carbon emission decisions[29]. Jiang et al (2019) focused on the two-level construction supply chain composed of the GC and the SC and constructed the profit distribution model of the construction supply chain under cap-and-trade policy and obtained the optimal profit distribution ratio and the level of carbon emission reduction efforts for both parties[30], this study considered three cases: the pure competition, the co-opetition and the pure cooperation, compared the optimal decisions in three cases. On the basis of this literature, our study pay attention to the fairness concern behavior, investigate the impact of fairness concern on the decision-making in construction supply chain.…”

“…This model will decrease the SC’s motivation. This problem has been notices in the existing research and a co-opetition model has been proposed, which proves that the performance of both parties will be better than in the pure competition model[30]. The co-opetition model allows the two parties to determine the profit distribution ratio with the goal of maximizing the profit of the supply chain and then to determine their own efforts according to the goal of maximizing their own profits.…”