A Study On The Financing Equilibrium For The Low Carbon Supply Chain

With the development of low carbon economy and the enhancement of consumers' low carbon conscious,low carbon and carbon abatement gradually come into our eyes.Besides the carbon emission pressure,when making decision on production and operation,capital constraint is also a dedicate problem that is confronted by many small and middle-sized enterprises(SMEs).Existing literature studying low carbon supply chain always ignore the limit of capital constraint,or literatures studying supply chain financing ignore the particularity of the supply chain.Thus,it's necessary to study the financing problem of the capital-constrained and emission dependent supply chain.Under the cap and trade system,we put the capital constraint problem into the low carbon supply chain and build an emission-dependent supply chain with one supplier and one emission-dependent manufacturer that is capital-constrained.When demand is uncertain and consumers have low-carbon preferences,we investigate the financing preferences of the emission-dependent supply chain from a competitive bank and the supplier.Main contents are as follows: Firstly,when the emission dependent manufacturer decides not to invest in carbon abatement,under the cap and trade system,we study the financing equilibrium of the emission dependent supply chain with capital constraint to check whether the emission-dependence of the supply chain and the Cap and Trade system influence the financing of the emission-dependent supply chain.Then,considering when the manufacturer choose to invest in carbon abatement,we study the optimal carbon reduction and check if the existence of investment in carbon abatement influences the selection of the financing equilibrium.Through the analysis of the financing preference of the emission-dependent supply chain with and without considering investment in carbon abatement,we show that the existence of investments in carbon abatement and cap and trade system will have no impact on the selection of the financing equilibrium.In line with the existing literature studying supply chain financing,we find that supplier's trade credit financing serves as the unique financing equilibrium for manufacturers regardless of whether investments in carbon abatement are considered.Irrespective of the chosen financing equilibrium,if a manufacturer chooses to invest in carbon abatement,the dominant supplier will offer a wholesale price to prompt themanufacturer to choose the largest feasible carbon emission reduction and maximize his profit.Finally,based on the model,we present a set of numerical analysis: 1)We analyze the performance of supply chain members under trade credit with and without considering carbon abatement to stress the importance of carbon abatement;2)We analyze the impacts of relevant parameters on the performance of supply chain members to shed light on low carbon supply chain when making decisions on investment in carbon abatement;3)We compare the supply chain performance under different financing equilibrium to stress the importance of trade credit.Under the cap and trade system,we study the financing equilibrium of the low carbon supply chain with capital constraint.Certain innovations are as follow:(1)We are the first to study the financing equilibrium of the emission dependent supply chain,thus providing the theory support to the management of the emission dependent supply chain with capital constraint.(2)When considering the financing equilibrium of the emission dependent supply chain with capital constraint,we are the first to propose the optimal carbon reduction of the emission dependent supply chain,thus shed light to the carbon abatement of the emission dependent and capital constrained supply chain.