Effects Of Equity Holding On Supply Chain’s Pricing And Emission Reduction Decisions

At present,many countries adopt cap-and-trade regulation to deal with climate change.At the same time,consumer low-carbon awareness gradually increases,and the market size of low carbon products also increases.Therefore,cap-and-trade regulation and consumers’ low carbon demand directly affect the supply chain enterprises’ decisions of carbon emission reduction and pricing.Equity holding between upstream and downstream enterprises in the low-carbon supply chain will inevitably affect the enterprise’s carbon emission reduction decisions,which will help eliminate the phenomenon of “free riding” of retailers and improve the supply chain’s performance.Therefore,based on cap-and-trade regulation,this paper studies the emission reduction and pricing decisions,performance and supply chain coordination when the low-carbon supply chain enterprises cooperate in equity holding with each other.Firstly,under the cap-and-trade regulation,we construct a Stackelberg game model of cross-shareholding between manufacturer and retailer based on complete information.We obtain the low-carbon supply chain enterprises’ optimal decisions and performance respectively in centralized decision-making scenario,decentralized decision-making scenarios with and without cross-shareholding.Then,we compare the optimal decisions and performance under different scenarios,and analyze the impacts of cross-shareholding and carbon-trade price on the enterprises’ decision and performance.Finally,we use example analysis to demonstrate those conclusions.We find that cross-shareholding between manufacturer and retailer can change the effects of carbon-trade price on the optimal emission reduction per unit product.Cross-shareholding can promote manufacturer to increase carbon emission reduction,increase the low-carbon product demand,and reduce the optimal wholesale price and retail price per unit products under certain conditions.When the percentage of cross-shareholding meets certain conditions,cross-shareholding can effectively improve manufacturer’s and retailer’s performance and achieve supply chain coordination.Secondly,under the cap-and-trade regulation,we construct a Stackelberg game mode while the retailer holds the manufacturer’s equity based on incomplete information.Then,analyze the effects of equity holding and carbon emission cost information on the enterprises’ optimal decisons and performance at the scenarios of sharing or not sharing carbon emission cost information,and design transfer payment based on incentive compatibility constraint and participation constraint to coordinate the supply chain.We find that the retailer holding the manufacturer’s equity can promote the manufacturer to reduce carbon emission.Whether the manufacturer shares cost information with the retailer or not,equity holding is always favorable to the manufacturer,but is not necessarily favorable to the retailer.The retailer can obtain more profits by holding enough percentage of equity share of the manufacturer efficient in emission reduction when the consumer low-carbon awareness is high.When the consumer low-carbon awareness is low,the retailer shouldn’t hold the manufacturer’s equity.Whether sharing cost information or not will not affect the manufacturer’s emission reduction and pricing decisions,but will affect the retailer’s pricing decision.Under certain conditions,the manufacturer and the retailer are more inclined to share information,otherwise,more inclined not to share information.The effects of equity shareholding on the information value are related to the manufacturer’s emission reduction efficiency.Finally,transfer payment contract can effectively improve the supply chain enterprises’ performance and realize supply chain coordination.