Effect of equity holding on a supply chain’s pricing and emission reduction decisions considering information sharing

Liangjie Xia, Qingyi Kong, Youdong Li and Juanjuan Qin ()
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Liangjie Xia: Tianjin University of Finance and Economics
Qingyi Kong: Tianjin University of Finance and Economics
Youdong Li: Inner Mongolia University of Finance and Economics
Juanjuan Qin: Tianjin University of Finance and Economics

Annals of Operations Research, 2023, vol. 329, issue 1, No 22, 619-656

Abstract: Abstract Against the backdrop of cap-and-trade regulations, we construct a low-carbon supply chain in which a seller holds the manufacturer’s equity. We investigate the impact of the seller’s equity holding and the cap-and-trade regulations on the supply chain members’ optimal decisions, profits and coordination in the cases of information symmetry and asymmetry. We find that, regardless of whether there is information asymmetry or symmetry, the manufacturer always benefits from an equity holding, while the seller can only earn higher profits through equity holding if the percentage of equity holding and the level of consumer low-carbon awareness are both sufficiently high. Both the seller and the manufacturer prefer the information asymmetry scenario when the manufacturer’s efficiency in emission reduction is below a particular threshold. In addition, equity holding can incentivize the manufacturer to share its information with the seller. Equity holding is beneficial for emission reduction and market demand but is not always beneficial for improving the supply chain’s total profit and reducing the supply chain’s total carbon emissions. Finally, with a transfer payment contract, a decentralized supply chain can obtain the same optimal profits as in the centralized supply chain scenario, and both the manufacturer and seller can earn higher profits than before.

Keywords: Cap-and-trade; Equity holding; Emission reduction; Information asymmetry; Supply chain coordination (search for similar items in EconPapers)
Date: 2023
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DOI: 10.1007/s10479-021-03930-7

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