Influence Mechanism on Supplier Emission Reduction Based on a Two-Level Supply Chain

Lina Ma, Xinran Zhang and Yushen Du
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Lina Ma: Business School, Jilin University, Changchun 130012, China
Xinran Zhang: Business School, Jilin University, Changchun 130012, China
Yushen Du: Business School, Jilin University, Changchun 130012, China

IJERPH, 2021, vol. 18, issue 23, 1-16

Abstract: The purpose of this paper is to investigate environmental performance of a supply chain which consists of an upstream supplier and a downstream firm. A mathematical model considering both downstream firm’s monitoring and governmental intervention is developed. Afterwards, a numerical example is presented to show the equilibriums of these models and the optimal choices of firms and government. The results show that when customers’ environmental awareness increases, both total environmental impact and social welfare decrease. The downstream firm’s monitoring will certainly reduce the total environmental impact. In most cases, it does not matter whether the downstream firm chooses to monitor the supplier or not, the total environmental impact and social welfare would not be affected when the government chooses subsidy. If a subsidy is present, firms and environment will be better than those without subsidy. Hence, the government is more likely to choose to provide subsidy and the downstream firm will not monitor the supplier’s greenhouse gas (GHG) emissions reduction effort. In a few cases when environmental impact is too large, taxation may be the optimal choice for the government and the downstream firm will choose to monitor the supplier’s GHG emissions reduction investment.

Keywords: supply chain; emissions reduction; downstream firm’s monitoring; taxation; governmental subsidy (search for similar items in EconPapers)
JEL-codes: I I1 I3 Q Q5 (search for similar items in EconPapers)
Date: 2021
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (1)

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