Research On The Production And Emission Decision Mechanism Of Firms Under Low-Carbon Policy

Carbon emission is one of the main cause of global warming, which has been paid more attention on, and carbon reduction has become the main measures and means for some countries and regions to reduce carbon emissions and mitigate the climate change. To fundamentally solve the climate problem brought about by excessive emissions, we need to promote the development of low-carbon economy. In recent years, the governments attach great importance to environmental problems, and they have adopted a series of rules and regulations from the perspective of social welfare maximization by considering the environmental benefits and economic benefits. The low carbon economy has had a great development. Under the background of government advocating low carbon economy, there are large changes in the business environment and decision-making behavior of the firms. In this article, in the context of the low carbon economy, we discuss the government how to make effective policies to reduce carbon emissions and the firms how to make the economic and reasonable production and carbon emissions strategy to meet the requirement of low carbon development path.Firstly, from the perspective of interaction between firms and the government, we build the two-phase game model among the government, the manufacturer and the consumers, also comprehensive consideration and comparation of the impact of the three different subsidy models (subsiding the manufacturers, subsiding the consumers and subsidizing both manufacturers and consumers) on the decision-making behavior of firms and consumers are derived. By introducing a two stage dynamic game method, we analyze the impact of the subsidy models on demand, product price, the manufacturer’s profit, consumer surplus and social welfare effects.Secondly, under the background of cap-and-trade mechanism, we consider the production of a product production and carbon trading decisions of the manufacturer from the perspective of a single firm. The optimal decisions of the firm and the government under this mechanism is obtained by establishing the production and carbon trading decision-making model of the manufacturer and the optimal carbon quotas model of government. Then, extend the problem to the practical situation, which is the optimal decisions of the manufacturer and the government under capacity constraints and Cap-and-Trade mechanism are derived.Finally, from the perspective of supply chain, the allocation of the emission reduction target and production decisions of firms under the mandatory reduction mechanism is discussed. Based on the two stage supply chain, which is composed of a manufacturer and a retailer, we use Stackelberg game models to solve this problem by considering the following four scenarios:(1) the manufacturer is the leader and the allocator;(2) the manufacturer is the follower and the allocator;(3) the retailer is the follower and the allocator; and (4) the retailer is the leader and the allocator. In addition, the abatement limits of firms are taken into consideration. On this basis, we discuss the optimal decisions of manufacturers and retailers in the centralized decision-making mode.The innovation of the study is that:First, from the perspective of interaction between firms and the government, we compare the impact of the three different subsidy models on the decision-making behavior of firms and consumers. Second, the capacity constraints are common problems faced by almost all firms and the former studies merely investigated the capacity constraint problems or just considered the influence of Cap-and-Trade mechanism on the carbon trading and production decision. Our work made up those flaws. Third, from the point of view of the existing work, the carbon constraints tend to be considered at the level of individual firms, and this paper, from the level of the supply chain, studies the allocation problem of the emission reduction target and production decisions under the mandatory reduction mechanism by considering a manufacturer and a retailer.The practical implication is that:First, under the background of government subsidy we analysis and compare the impact of the different government subsidy policy on demand, product prices, profits, consumer surplus and social welfare, and provide some suggestions for the government and for the firms and consumers to make decisions under such background. Second, under cap-and-trade mechanism, the capacity constraints should be brought into the firms’production and carbon trading decisions, which makes the study of this paper is more in line with the actual situation. For the government, we also find that the Cap-and-Trade mechanism is not always the optimal mechanism when considering the capacity constraints, that is in certain conditions, such mechanism should not be taken and such conditions is given in this paper. Third, in practice, the mandatory reduction mechanism is more common used, and it is practical for studying the production and emission reduction task allocation decision at the level of supply chain. Moreover, we find a reasonable way to make carbon reduction assignment in an effective and low cost.