Unregulated Cap-and-Trade Model for Sustainable Supply Chain Management

Massimiliano Caramia and Giuseppe Stecca ()
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Massimiliano Caramia: Dipartimento di Ingegneria dell’Impresa, Università di Roma “Tor Vergata”, Viale del Politecnico 1, 00133 Rome, Italy
Giuseppe Stecca: Consiglio Nazionale delle Ricerche, Istituto di Analisi dei Sistemi ed Informatica “Antonio Ruberti”, Via dei Taurini 19, 00185 Rome, Italy

Mathematics, 2024, vol. 12, issue 3, 1-14

Abstract: Cap-and-trade models have been largely studied in the literature when it comes to reducing emissions in a supply chain. In this paper, further pursuing the goal of analyzing the effectiveness of cap-and-trade strategies in reducing emissions in supply chains, we propose a mathematical model for sustainable supply chain management. This optimization program aims at reducing emissions and supply chain costs in an unregulated scenario w.r.t. the cap definition, i.e., trading CO 2 is allowed but no formal limit on the CO 2 emissions is imposed. Also, we considered an initial budget for technological investments by the facilities in the considered supply chain, allowing plants to reduce their unit production emissions at a different unit production cost. For this model, differently from what exists in the literature, we derive some theoretical conditions guaranteeing that, if obeyed, the emissions over time have a non-increasing trend meaning that decreasing caps over time can be attained with a self-regulated scenario. Computational results show the effectiveness of our approach.

Keywords: cap-and-trade policy; bi-objective problem; mathematical modeling; supply chain optimization (search for similar items in EconPapers)
JEL-codes: C (search for similar items in EconPapers)
Date: 2024
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