Optimal Carbon Abatement Strategy for Manufacturers under Cap-and-Trade

Qiangfei Chai, Yiming Li (), Zhongdong Xiao and Kee-hung Lai
Additional contact information
Qiangfei Chai: School of Management, Nanjing University of Posts and Telecommunications, Nanjing 210023, China
Yiming Li: School of Economics and Management, Xidian University, Xi’an 710126, China
Zhongdong Xiao: School of Management, Xi’an Jiaotong University, Xi’an 710049, China
Kee-hung Lai: Department of Logistics and Maritime Studies, The Hong Kong Polytechnic University, Hung Hom, Kowloon, Hong Kong, China

IJERPH, 2022, vol. 19, issue 17, 1-21

Abstract: Carbon emission abatement is very important for manufacturers regulated by environmental policies. However, choosing an optimal carbon abatement strategy is difficult for many firms. This paper attempts to explore the appropriate carbon abatement strategy for firms that are regulated by cap-and-trade. Specifically, by bringing remanufacturing into consideration, this paper examines a manufacturer that has four alternative carbon abatement strategies: (1) do nothing, (2) invest in carbon abatement, (3) engage in remanufacturing, or (4) become involved in investment and remanufacturing together. The models of these four strategies are first developed in a monopolistic operating environment. The results show that among the four carbon abatement strategies, although the fourth strategy has the highest costs, it generates the largest profits for the manufacturer, passes the greatest benefits along to consumers, and has the best environmental performance. Next, this study is extended to a competitive environment. The results show that the optimal strategy in the monopolistic environment no longer maximizes profits, and decision guidance is offered for the manufacturer operating under such an environment.

Keywords: sustainable operations; carbon emission abatement; remanufacturing; cap-and-trade (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 (1)

Downloads: (external link)
https://www.mdpi.com/1660-4601/19/17/10987/pdf (application/pdf)
https://www.mdpi.com/1660-4601/19/17/10987/ (text/html)

Related works:
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:gam:jijerp:v:19:y:2022:i:17:p:10987-:d:905202

Access Statistics for this article

IJERPH is currently edited by Ms. Jenna Liu

More articles in IJERPH from MDPI
Bibliographic data for series maintained by MDPI Indexing Manager ().