Manufacturers’ Production And Pricing Model Research With Cap And Trade Policies

In recent years, the climate problem is becoming more and more serious with the global warming trend, caused by the carbon dioxide(CO2) and other greenhouse gas emissions.Therefore, initiate the global reducing emission greenhouse gases,especially carbon dioxide(CO2), to curb the greenhouse effect which lead to the living environment deterioration of human being, even the survival.Manufacturing enterprises are very important part of social economy developing, but the manufacture, processing, warehousing, and transportation process will inevitably produce carbon dioxide(CO2). In 2011, China’s industrial sector’s total carbon emissions more than 2.5 billion tons, the ratio is close to 60% for manufacturing sector. Green low carbon is called for sustainable developing, the government has made policy to reduce emissions by carbon cap and trade policy.So reducing carbon dioxide(CO2) emissions has become a new topic that manufacturers have to face. How to make production decision, adjust their production operation behavior, and utilize carbon reduction technology responsively. Therefore, the paper is based on the micro perspective to make manufacturing enterprises’ production and pricing decisions,research production and pricing decisions of enterprises in the carbon cap and trade policy constraints.First of all, this paper studies the production decision of single product manufacturing enterprises under the carbon cap and trade policy. Research shows that:(1) in the condition of the carbon emissions trading decision-making situation, manufacturing enterprises can according to how much the government initial carbon quota give, making optimal production quantity and carbon emissions trading decision.(2) in the condition of the green technology investment decision-making situation, manufacturing enterprises can according to how much the government initial carbon quota give, making optimal production quantity and level of investment in green technology.(3) in the condition of combination methods into carbon emissions trading and green technology investment, manufacturing enterprises can according to how much the government initial carbon quota give, making optimal production quantity and purchasing carbon emissions policy and level of investment in green technology.Secondly, the paper studies the production decision of two products manufacturing enterprises under the carbon cap and trade policy. Research shows that:(1) in the condition of the carbon emissions trading decision-making situation, manufacturing enterprises can according to how much the government initial carbon quota give, making optimal production quantity and carbon emissions trading decision.(2) in the condition of the green technology investment decision-making situation, manufacturing enterprises can according to how much the government initial carbon quota give, considering the green technology investment for two products, then making their own optimal combination of production and level of investment in green technology under their own situations.(3) in the condition of combination methods into carbon emissions trading and green technology investment, manufacturing enterprises can according to how much the government initial carbon quotas give, considering the green technology investment for two products, then making their own optimal combination of production, level of investment in green technology and purchasing carbon emissions policy under their own situations.Thirdly, based on the first two chapters’ research, this paper studies the production decision and pricing decision of single product manufacturing enterprises under the carbon cap and trade policy constraints. Research shows that:(1) in the condition of the carbon emissions trading decision-making situation, manufacturing enterprises can according to how much the government initial carbon quota give, making the optimal production quantity and pricing decision, and carbon emissions trading decision.(2) in the condition of the green technology investment decision-making situation, manufacturing enterprises can according to how much the government initial carbon quota give, making optimal production quantity and pricing decision and level of investment in green technology.(3) in the condition of combination methods into carbon emissions trading and green technology investment, manufacturing enterprises can according to how much the government initial carbon quotas give, making optimal production and pricing decision, purchasing carbon emissions policy and level of investment in green technology.Finally, on the basis of the fifth chapter studies the production decision and pricing decision of two products manufacturing enterprises under the carbon cap and trade policy constraints. Research shows that:(1) in the condition of the carbon emissions trading decision-making situation, manufacturing enterprises can according to how much the government initial carbon quota give, making the optimal production quantity and pricing decision, and carbon emissions trading decisions.(2) in the condition of the green technology investment decision-making situation, manufacturing enterprises can according to how much the government initial carbon quota give, considering the green technology investment for two products, then making their own optimal production and pricing decision, and level of investment in green technology under their own situations.(3) in the condition of combination methods into carbon emissions trading and green technology investment, manufacturing enterprises can according to how much the government initial carbon quotas give, considering the green technology investment for two products, then making their own optimal production and pricing decision, purchasing carbon emissions policy and level of investment in green technology under their own situations.According to the analysis and optimization of the model, this paper also gets some important management implications.(1) In the limit of carbon constraints, manufacturing enterprises of carbon dioxide(CO2) emissions will not exceed the government’s allowance. Carbon emissions trading make flexibility to manufacturing enterprises to adjust the production and pricing decision of enterprises through reasonable carbon emissions trading. The good carbon cap and trade mechanism in the implementation of carbon emission reduction responsibility of manufacturing enterprises, at the same time, can optimize and improve the production and pricing decision.(2) in the limit of carbon constraints, manufacturing enterprises through green technology investment can reduce per unit of product’s carbon emissions, which can obtain the carbon emissions savings, in order to maintain or expand production, but also get profit when there is a surplus in carbon emissions. Green technology investment can increase the expected profits of manufacturing enterprises.(3) Whether the maximum expected profit of manufacturing enterprises in carbon emissions trading is higher than that of non-carbon constraint is depends on the government at the beginning of the period for manufacturing carbon quotas, so scientific and reasonable formulation of the initial carbon quota is an important task of the government. At the same time, the conditions of manufacturing enterprises in carbon emission reduction technology investment are that unit marginal cost of carbon emissions is lower than the market price per unit of carbon emissions after green technology investment. Therefore, the government should be guided in the formation and development of carbon emissions trading mechanism, and use tax relief, financial subsidies and other ways to guide and encourage enterprises to carry out low-carbon emission reduction technology innovation and use. In the carbon cap and trade policy, the government should play a positive role, in order to mobilize the enthusiasm of enterprises to participate in the making of carbon emission reduction, and won’t make the overall social welfare decline.The conclusion of this paper can provide some useful ideas for manufacturing enterprises’ production and pricing decisions under carbon emission trading policy constraint. At the same time, it also can provide some reference value for the government’s carbon emissions policy.