The Allocation Of Carbon Emission Abatement Target And Pricing Under Option Contract

With the deterioration of environment, government has established emission targets to reduce the greenhouse gases by publishing all kinds of emission policies to encourage different industries to be part of this project. Companies with strong awareness of environmental protection, also design their own emission targets. In order to achieve the targets, they tend to cooperate with other members in the supply chain. It is the urgent problem for companies to make their emission decisions under the government low carbon policies. After the comprehensive related research analysis, we study the allocation of carbon emission, ordering decisions and pricing decisions based on carbon tax policy and option contract. The paper is divided into two parts:Firstly, based on the option contract and carbon tax policy, this paper illustrates the allocation of carbon emission, ordering decisions and pricing decisions. In this paper, the manufacturer is the allocator and the so-called leader. For the retailer, the paper solves the optimal ordering quantity and the optimal retailing price. As for the manufacturer, the paper investigates the optimal producing quantity and the optimal allocation ratio. Besides, the paper studies the effect of carbon tax policy on the optimal decisions and profits of each member in the supply chain.Also, considering the option market, spot market and carbon tax, this paper establishes the profit models of the retailer and the manufacturer under one scenario, that is the manufacturer has the allocation right. For the retailer, the paper illustrates the optimal ordering quantity and the optimal retailing price. As for the manufacturer, the paper investigates that the optimal producing quantity and the optimal allocation ratio. Besides, the paper studies how the supply chain members are impacted by the spot market. Lastly, this paper investigates the effect of carbon tax policy and the rate of trading successfully through spot market on the optimal decisions and profits of each supply chain members.