The Sustainable Supply Chain Network Competition Based on Non-Cooperative Equilibrium under Carbon Emission Permits

Peiyue Cheng, Guitao Zhang and Hao Sun
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Peiyue Cheng: Departement of Management Science and Engineering, School of Business, Qingdao University, Qingdao 266071, China
Guitao Zhang: Departement of Management Science and Engineering, School of Business, Qingdao University, Qingdao 266071, China
Hao Sun: Departement of Management Science and Engineering, School of Business, Qingdao University, Qingdao 266071, China

Mathematics, 2022, vol. 10, issue 9, 1-31

Abstract: Under the background of a circular economy, this paper examines multi-tiered closed-loop supply chain network competition under carbon emission permits and discusses how stringent carbon regulations influence the network performance. We derive the governing equilibrium conditions for carbon-capped mathematical gaming models of each player and provide the equivalent variational inequality formulations, which are then solved by modified projection and contraction algorithms. The numerical examples empower us to investigate the effects of diverse carbon emission regulations (cap-and-trade regulation, mandatory cap policy, and cap-sharing scheme) on enterprises’ decisions. The results reveal that the cap-sharing scheme is effective in coordinating the relationship between system profit and carbon emission abatement, while cap-and-trade regulation loses efficiency compared with the cap-sharing scheme. The government should allocate caps scientifically and encourage enterprises to adopt green production technologies, especially allowing large enterprises to share carbon quotas. This study can also contribute to the enterprises’ decision-making and revenue management under different carbon emissions reduction regulations.

Keywords: non-cooperative equilibrium; complex supply chain network; environmental policies; circular economy (search for similar items in EconPapers)
JEL-codes: C (search for similar items in EconPapers)
Date: 2022
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (1)

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