Impact of Carbon Transfer and Low Carbon Preferences on Firm Decision Making Under Two Power Structures

Feng Xue, Zishan Liao (), Qian Qian and Zhenggang Jiao
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Feng Xue: School of Mathematics, Chengdu Normal University, Chengdu 611130, China
Zishan Liao: School of Mathematics, Chengdu Normal University, Chengdu 611130, China
Qian Qian: School of Business, Sichuan Normal University, Chengdu 610101, China
Zhenggang Jiao: School of Mathematics, Chengdu Normal University, Chengdu 611130, China

Sustainability, 2025, vol. 17, issue 11, 1-27

Abstract: The dynamics of carbon transfer and shifting consumer preferences toward low-carbon products significantly influence firms’ strategic choices and accelerate their transition to greener practices. This study models a secondary supply chain involving a supplier, a high-carbon manufacturer, and a low-carbon manufacturer, analyzing equilibrium outcomes for pricing and profit under two power structures: one where the high-carbon manufacturer holds greater influence, and another where both manufacturers have equal power. Numerical simulations are used to examine how carbon transfer and consumer preferences shape pricing, profitability, and strategic responses across the supply chain. The results show that high-carbon manufacturers with greater market power raise prices to offset the cost of carbon, while those with equal power are more constrained by competition and have to track market dynamics in pricing. Low-carbon manufacturers, more sensitive to consumer preferences, benefit from rising demand, gaining pricing power and sales, while high-carbon manufacturers need to raise prices initially and then gradually reduce them. Although increased carbon transfers offer high-carbon manufacturers greater strategic flexibility, they raise supplier costs and prices for high-carbon products, with limited effect on low-carbon manufacturers.

Keywords: power structures; low low-carbon preferences; carbon transfers; supply chain (search for similar items in EconPapers)
JEL-codes: O13 Q Q0 Q2 Q3 Q5 Q56 (search for similar items in EconPapers)
Date: 2025
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