Cost-Sharing Mechanisms for A Wood Forest Product Supply Chain under Carbon Cap-and-Trade

Mingjun Sun, Hongjun Peng and Shuai Wang
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Mingjun Sun: College of Economics and Management, Nanjing Forestry University, Nanjing 210037, China
Hongjun Peng: College of Economics and Management, Nanjing Forestry University, Nanjing 210037, China
Shuai Wang: College of Economics and Management, Nanjing Forestry University, Nanjing 210037, China

Sustainability, 2018, vol. 10, issue 12, 1-19

Abstract: We consider a wood forest product supply chain consisting of a forestry company and a wood forest products manufacturer, where the forestry company produces timber and forestry carbon sinks, and the manufacturer consumes timber and carbon emission rights. A Stackelberg model is adopted to investigate the forest scale and carbon emission reduction decisions of the supply chain. We design and analyze the carbon emission reduction cost-sharing (ERCS) mechanism and carbon sink cost-sharing (SCS) mechanism, respectively. The result shows that both contracts can help the wood forest product supply chain to achieve higher profits. The ERCS mechanism may encourage the manufacturer to increase emission reduction level and the forestry company to expand the forest scale. The SCS mechanism is beneficial to the expansion of carbon sink forests; however, it may lead to the manufacturer decreasing investment in carbon emission reduction measures.

Keywords: cap-and-trade; supply chain collaboration and coordination; wood forest products; forestry carbon sinks; cost sharing (search for similar items in EconPapers)
JEL-codes: O13 Q Q0 Q2 Q3 Q5 Q56 (search for similar items in EconPapers)
Date: 2018
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (5)

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