Strategies for Capital Constrained Timber and Carbon Sink Supply Chain under the Cap-and-Trade Scheme

Xinyue Yang, Ye Song, Mingjun Sun and Hongjun Peng
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Xinyue Yang: College of Economics and Management, Nanjing Forestry University, Nanjing 210037, China
Ye Song: College of Economics and Management, Nanjing Forestry University, Nanjing 210037, China
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

Sustainability, 2020, vol. 12, issue 11, 1-15

Abstract: We consider a capital constrained timber and carbon sink supply chain under the cap-and-trade scheme, where the forest company produces timber and carbon sink. We consider two subsidy modes: financing subsidy to the carbon sink forests and financing subsidy to the manufacturer’s emission reductions. We apply a Stackelberg model and mainly consider the impact of subsidies on the profits and the strategies of the supply chain members. The results show that when the government gives a financing subsidy to the carbon sink forests, it is conducive to promoting the expansion of carbon sink forests, as well as the enhancement of the forest company’s profit. However, a larger supply of carbon sinks generates a lower price, which leads to the manufacturer reducing the technical emission reduction level and purchasing more carbon emission rights instead. On the other hand, when the manufacturer receives a financing subsidy for the technical emission reduction costs, its production becomes cleaner than before, and the profits of the forest company and the manufacturer increase.

Keywords: financing subsidy; supply chain; green finance; cleaner production (search for similar items in EconPapers)
JEL-codes: O13 Q Q0 Q2 Q3 Q5 Q56 (search for similar items in EconPapers)
Date: 2020
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (2)

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