In-house production and outsourcing under different emissions reduction regulations: An equilibrium decision model for global supply chains

Yuxiang Yang, Shadi Goodarzi, Armin Jabbarzadeh and Behnam Fahimnia

Transportation Research Part E: Logistics and Transportation Review, 2022, vol. 157, issue C

Abstract: A primary dilemma for multinational firms facing different emissions reduction regulations is determining what to produce in-house and what to outsource. We study a supply chain with manufacturers and overseas suppliers each facing different carbon tax rates. We present an in-house production and outsourcing equilibrium decision model as well as a modified projection algorithm for this supply chain. Numerical examples focus on examining how carbon tax rates and consumer’s carbon awareness affect in-house production and outsourcing decisions. Analysis of the numerical results provides important managerial insights and carbon policy implications which are thoroughly discussed in this paper.

Keywords: Supply chain; Outsourcing; Carbon tax; Consumer carbon awareness; Equilibrium decision model; Variational inequality (search for similar items in EconPapers)
Date: 2022
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Citations: View citations in EconPapers (9)

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DOI: 10.1016/j.tre.2021.102446

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