Sustainable Trade Credit and Replenishment Policies under the Cap-And-Trade and Carbon Tax Regulations

Juanjuan Qin, Xiaojian Bai and Liangjie Xia
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Juanjuan Qin: School of Business, Tianjin University of Finance and Economics, Tianjin 300222, China
Xiaojian Bai: School of Business, Tianjin University of Finance and Economics, Tianjin 300222, China
Liangjie Xia: School of Business, Tianjin University of Finance and Economics, Tianjin 300222, China

Sustainability, 2015, vol. 7, issue 12, 1-22

Abstract: The paper considers the sustainable trade credit and inventory policies with demand related to credit period and the environmental sensitivity of consumers under the carbon cap-and-trade and carbon tax regulations. First, the decision models are constructed under three cases: without regulation, carbon cap-and-trade regulation, and carbon tax regulation. The optimal solutions of the retailer in the three cases are then discussed under the exogenous and endogenous credit periods. Finally, numerical analysis is conducted to obtain conclusions. The retailer shortens the trade credit period as the environmental sensitivity of the consumer is enhanced. The cap has no effects on the credit period decisions under the carbon cap-and-trade regulation. Carbon trade price and carbon tax have negative effects on the credit period. The retailer under carbon cap-and-trade regulation is more motivated to obey regulations than that under carbon tax regulation when carbon trade price equals carbon tax. Carbon regulations have better effects on carbon emission reduction than with exogenous credit term when the retailer has the power to decide with regards credit policies.

Keywords: cap-and-trade regulation; carbon tax regulations; trade credit; inventory policies (search for similar items in EconPapers)
JEL-codes: O13 Q Q0 Q2 Q3 Q5 Q56 (search for similar items in EconPapers)
Date: 2015
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (13)

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