Study On Coordination And Optimization Of Supply Chain Operations Considering Carbon Cap-and-trade Mechanism

Company’s production function and cost structure have been changed undercarbon emissions constraints and carbon emissions trading mechanisms. Also, thetraditional two-dimentional input-output system, raw materials-products (services), istransformed into a three-dimentional input-output system, raw materials-products(services)-carbon emission permit. Since the consumers’ low carbon consciousnessimproves constantly and the product and service’s carbon emission has graduallybecome a part of consumer utility. Studying carbon footprint and carbon emissionsfrom the perspective of supply chain has become a consensus. It is becoming animportant subject of scientific research which is paid attention by business and theoryworld that research supply chain coordination and optimization under low carbonenvironment.Although a series of positive research findings related to this field has achieved, itis obviously that the optimization problems and jointly emission reduction of supplychain under low carbon environment are still open and important. For this reason,with the methods of game theory, theory of incentive compatibility and numericalanalysis, we focus on the study of game on carbon emission reduction betweengovernment and enterprises, and the optimization and coordination of carbon emissioncutting between the upstream and downstream of supply chain considering carbonemission constraint, carbon trading and the impact of product carbon footprint onmarket demand. The major research content of this paper is as follows:The government’s objective is different to the enterprises’. We construct a gamemodel as “carbon permit allocation-emissions reduction decision-output decision”between the government and enterprises. Based on the model, we analyse andcompare the optimized carbon permit allocation, output decision, carbon emissionreductions, carbon emission, corporate profits and social welfare under differentsituations that the enterprises cooperate or compete in emissions cutting research.Considering the differences on marginal cost of carbon reduction betweencompanies in supply chain, we study the game on jointly emission reduction between the supplier and the manufacturer and make an attempt to optimize the carbonemission reduction and profit of the supply chain with a transfer payment contract.We pay attention to the optimal emission reduction of the supplier andmanufacture in the set of Static Games of Complete Information and StackelbergGame. Considering participation constraint and incentive compatibility constraint, wedesign a self-enforcing transfer payment contract. With this contract, when thesupplier and manufacture make emissions reduction decision according to theindividual rational, the supply chain is able to securing of the optimal profit indecentralized decision mode equal to the optimal profit in centralized decision mode.We construct a nonlinear demand function according to carbon emission cuttingby manufacture and sales promoting by retailer under carbon emission constraint andcarbon trading in a retailer dominant supply chain. We explore the retailer andmanufacture’s optimal decision in different game process. And we compare theemission reduction, promotion level and the profit of companies and supply chain inStackelberg Game to which in centralized decision mode and in Static Games ofComplete Information. At last, we analyse the sensitivity of enterprise decision,consumer’s utility and the profit of supply chain to the consumer’s low carbonconsciousness.