Supply Chain Coordination under Carbon Emission Tax Regulation Considering Greening Technology Investment

Zhimin Wei and Yun Huang
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Zhimin Wei: School of Business, Macau University of Science and Technology, Macao, China
Yun Huang: School of Business, Macau University of Science and Technology, Macao, China

IJERPH, 2022, vol. 19, issue 15, 1-27

Abstract: In this paper, we firstly derive the optimal strategies, including greening technology investment, production volume and order quantity decisions with stochastic demand, for the emissions-dependent supply chain composed of one manufacturer and one retailer. Then, an advance purchase discount (APD) contract and an option contract are applied to coordinate the supply chain. Moreover, an innovative prepayment-based option (PBO) contract is designed based on an APD contract and an option contract. We discuss the cash flow, the inventory risk allocation and the impacts of carbon emission tax under each contract. It is found that considering improving cash flow, preselling (or option selling) as a means of supporting the manufacturer with sufficient cash flow will help expand production and invest in greening technology. From the perspective of avoiding inventory risk, the APD contract benefits the manufacturer while the option contract benefits the retailer. However, the PBO contract generates intermediate allocations of inventory risk between manufacturer and retailer.

Keywords: supply chain coordination; greening technology investment; advance purchase discount contract; option contract; carbon emission tax regulation (search for similar items in EconPapers)
JEL-codes: I I1 I3 Q Q5 (search for similar items in EconPapers)
Date: 2022
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (4)

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