Navigating the Carbon Challenge: Strategic Integration of Hybrid Policies in Green Supply Chains

Rui Tang, Dingyao Yu and Yongbo Tan ()
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Rui Tang: Collaborative Innovation Center for Pollution and Carbon Reduction, Chinese Research Academy of Environmental Sciences, Beijing 100012, China
Dingyao Yu: Consumer Affairs Center, China Academy of Civil Aviation Science and Technology, Beijing 100013, China
Yongbo Tan: School of Management, Harbin University of Commerce, Harbin 150080, China

Sustainability, 2025, vol. 17, issue 6, 1-23

Abstract: In the context of climate change, the increasing urgency to mitigate environmental impacts has driven firms to adopt green supply chain strategies. Existing research primarily focuses on either carbon tax or emission trading schemes, leaving a gap in understanding the combined impact of hybrid carbon policies. This study addresses this gap by developing a dual-tier supply chain model with a manufacturer and retailer, exploring the effects of a carbon tax, emission trading, and a hybrid policy on emission reduction strategies and pricing decisions. Using a reverse inductive method within a Stackelberg game framework, we identify optimal strategies for emission reduction and profit maximization under each policy scenario. Results indicate that the hybrid policy achieves the lowest unit carbon emissions when the manufacturer’s initial pollution level is below a critical threshold. This research contributes to the literature by providing actionable insights into the strategic advantages of hybrid carbon policies for firms seeking both profitability and sustainability in green supply chains.

Keywords: hybrid carbon policies; green supply chains; emission reduction strategies; carbon tax; emission trading scheme; Stackelberg game (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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