The Dual-Channel Low-Carbon Supply Chain Network Equilibrium with Retailers’ Risk Aversion Under Carbon Trading

Hongchun Wang and Caifeng Lin ()
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Hongchun Wang: School of Urban Economics and Management, Beijing University of Civil Engineering and Architecture, Beijing 102616, China
Caifeng Lin: School of Urban Economics and Management, Beijing University of Civil Engineering and Architecture, Beijing 102616, China

Sustainability, 2025, vol. 17, issue 6, 1-28

Abstract: Carbon emissions from human activities such as production and consumption have exacerbated climate deterioration. A common worldwide objective is to create a low-carbon economy by implementing carbon reduction measures in production, consumption, and other processes. To this end, this paper explores the production, price, carbon reduction rate, and profit or utility for a dual-channel low-carbon supply chain network (DLSCN) that includes numerous competing suppliers, manufacturers, risk-averse retailers, and demand markets under carbon trading. In order to create an equilibrium model for the DLSCN, risk-averse retailers are characterized using the mean-CVaR method, and each member’s optimal decision-making behavior is described using variational inequalities. A projection contraction algorithm is used to solve the model, and numerical analysis is presented to investigate how risk aversion, carbon abatement investment cost coefficients, and carbon trading prices affect network equilibrium. The results indicate that increasing retailers’ risk aversion can enhance supply chain members’ profits and carbon reduction rates. Retailers prioritize expected profits, while other members prefer them to focus more on CVaR profits. When retailers are more risk-averse and value CVaR, traditional retail channels become more popular. Increasing the carbon reduction investment cost coefficients for suppliers and manufacturers can boost their profits, and retailers also support this move to charge more for low-carbon products and enhance utility. When carbon trading prices rise, suppliers and manufacturers opt to increase carbon reduction rates to generate more profits from selling carbon allowances. This study provides decision-making references for achieving both economic and environmental benefits for members of DLSCN.

Keywords: dual-channel low-carbon supply chain network; carbon trading; risk aversion; mean-CVaR; variational inequality (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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