Low-Carbon Transition Models of High Carbon Supply Chains under the Mixed Carbon Cap-and-Trade and Carbon Tax Policy in the Carbon Neutrality Era

Liang Shen (), Fei Lin and T. C. E. Cheng
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Liang Shen: School of Public Finance and Taxation, Shandong University of Finance and Economics, Jinan 250014, China
Fei Lin: School of Public Finance and Taxation, Shandong University of Finance and Economics, Jinan 250014, China
T. C. E. Cheng: PolyU Business School, The Hong Kong Polytechnic University, Hung Hom, Kowloon, Hong Kong 999077, Hong Kong

IJERPH, 2022, vol. 19, issue 18, 1-21

Abstract: To achieve the goals of carbon peak and carbon neutrality, the low-carbon transformation (LCT) of high-carbon firms is inevitable. We construct game models of a supply chain with different dominant types under a mixed carbon policy that embraces carbon cap-and-trade and carbon tax. Solving each dominant model, we derive the effective area and optimal threshold of the mixed carbon policy to guide LCT. We find that the selling price, market demand, and profit of the supply chain system are equal in different dominant models due to the mixed carbon policy, but when a company dominates the supply chain, its profit is higher than when it is a subordinate. In addition, the high-carbon manufacturers (HCM) will pursue LCT only when the sum of the carbon tax rates and carbon trading prices is within a certain threshold, and the subordinate HCM are more likely to be driven to pursue LCT. Therefore, the government should adopt a differentiated hybrid carbon policy, setting a high (low) carbon tax rate for the HCM in a dominant (subordinate) position.

Keywords: carbon transition; mixed carbon policy; carbon cap-and-trade; carbon tax; sustainable supply chain (search for similar items in EconPapers)
JEL-codes: I I1 I3 Q Q5 (search for similar items in EconPapers)
Date: 2022
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (5)

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