Study On Pricing And Carbon Reducing Decisions Of Closed-loop Supply Chain Under Carbon Emission Permits Trade Mechanism

Greenhouse gas emission has brought a serious negative impact on biology and human. In order to realize the coordinated development of economy and environment, most governments have put forward and implemented all kinds of low carbon constraints. Carbon Emission Permits Trade Mechanism has been widely recognized as an important mechanism to reduce carbon emissions. The closed-loop supply chain is not only beneficial to carbon emission reduction and environmental protection, but also can reduce the production cost for the enterprise. Therefore, the pricing and emission reduction decision-making of closed-loop supply chain under Carbon Emission Permits Trade Mechanism has become the focus of academia and enterprises.This paper establishes the closed-loop supply chain constructed by manufacturer and retailer under Carbon Emission Permits Trade Mechanism in many research methods, including supply chain theory analysis, game theory, optimal solving. Based on the perspective of price and carbon reduction rate sensitive demand, both decentralized and centralized optimal pricing and emission reduction decision-making model of the closed-loop supply chain are studied. On the other hand, the closed-loop supply chain coordination model is established through the improved franchise contract. The research contents and conclusions are as follows:Firstly, the closed-loop supply chain structure under Carbon Emission Permits Trade Mechanism is established.Based on the low-carbon operation of closed-loop supply chain in HP, it is found that corporate profit is also affected by carbon trading in addition to traditional products trading under the Carbon Emission Permits Trade Mechanism. And as consumers’ environmental protection consciousness gradually strengthened, more and more consumers are increasingly in demand of low carbon products. Therefore, the impact of carbon emission permits trade on the enterprises in closed-loop supply chain is studied in this paper, and the closed-loop supply chain structure composed of manufacturer and retailer under the mechanism is established combined considering the mode of manufacturer’s carbon reduction alone.Secondly, research on pricing and carbon reduction decisions of closed-loop supply chain under Carbon Emission Permits Trade Mechanism.Based on the closed-loop supply chain structure under Carbon Emission Permits Trade Mechanism, profit models of each firm are established from the perspective of price and carbon reduction rate sensitive demand. And the optimal price and carbon reduction rate decisions under different decision-making mode can be obtained by the profit maximization. By comparison, the following conclusions are found.(1).With the decrease of the coefficient of carbon reduction cost, both the carbon reduction rate and the carbon reduction cost invested by manufacturer will increase.(2).With the gradual increase of consumer environmental protection awareness, it is helpful to encourage enterprise to improve the carbon emission reduction level of product.(3).Under carbon emission trading mechanism, the wholesale price and retail price is only associated with the production cost and carbon emissions of the forward supply chain. And it has nothing to do with that of the reverse supply chain. However, the recycling price and transfer price is not only related to reproduction cost and carbon emissions of reverse supply chain, but also related to that of the forward supply chain.(4).The optimal carbon reduction rate of decentralized decision-making is lower than that of centralized decision-making. And the profitability of closed-loop supply chain under centralized decision-making is higher than that under decentralized decision-making.At last, this paper verifies the correctness of the above conclusions through numerical simulation.Thirdly, the improved franchise contract is designed to coordinate the pricing and carbon reduction decisions of the closed-loop supply chain under Carbon Emission Permits Trade Mechanism.In order to reduce the efficiency loss of decentralized decision-making, the improved franchise contract is designed. The coordination model of pricing and carbon reduction under the mechanism is established. And a numerical example is given to illustrate the effectiveness of the contract and the reasonable coordination strategies. We can see that both manufacturer’s profit and retailer’s profit are increased, and the optimal carbon reduction rate is also improved.Fourthly, the impacts of related parameters on the decisions and profits are analyzed.By sensitivity analysis of carbon trading price on the operation of closed-loop supply chain, it is found that both retail price and recycling price will increase with carbon trading price increases. And the government can make enterprise achieve the highest carbon reduction rate by regulating carbon trading price. By sensitivity analysis of remanufacturing carbon reduction effect, it is found that if remanufacturing carbon reduction effect is more positive, the carbon reduction cost required to be invested will be lower, and the amount of recycled waste products will be greater. By analyzing the consumer preferences, it is found that the increase of low-carbon preference will encourage enterprise to increase investment in carbon reduction technology.