Channel Selection and Sustainable Low Carbon Strategies with Cap-and-Trade Regulations

Qiaoyan Huang () and Feng Wei
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Qiaoyan Huang: School of Economics and Management, Southeast University, Nanjing 211189, China
Feng Wei: School of Economics and Management, North China Electric Power University, Beijing 102206, China

Sustainability, 2025, vol. 17, issue 4, 1-20

Abstract: Environmental protection and low-carbon life are the focus of global attention. This paper adopts Stackelberg’s game method to discuss channel selection. Two decision models are involved: (1) model P represents dual-channel structure of the manufacturer, and (2) model O represents dual-channel structure of the retailer. We examined the optimal pricing strategy, and profit distribution among stakeholders. This research showed that, compared to model O, model D always sells more products, and model D has a higher (manufacturer)/lower (retailer) profits than model O. The retailer’s offline price exhibits a linear decline. At the point of intersection (0.28, 45.5), the price in both models converge to an identical value. From an environmental perspective, model D is more environmentally friendly than model O when unit carbon price is small. Furthermore, the emission reduction rate is higher if consumers’ online preference coefficient is not high in model D. Through the lens of social welfare, the sales strategies employed in model O yield higher social welfare benefits compared to those in model D. For the entire supply chain, model O is the optimal choice if they focus on environmental performance and social welfare. The research provides application guidance for the sustainable development of enterprises.

Keywords: channel selection; cap-and-trade regulation; pricing strategy; environmental protection; social welfare (search for similar items in EconPapers)
JEL-codes: O13 Q Q0 Q2 Q3 Q5 Q56 (search for similar items in EconPapers)
Date: 2025
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