Supply Chain Emission Reduction and Financing Decisions under Carbon Cap Regulation with Government Subsidies

Zongqiu Zhang (), Junping Shao () and Yanan Sun ()
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Zongqiu Zhang: Suzhou University of Science and Technology, School of Business
Junping Shao: Suzhou University of Science and Technology, School of Business
Yanan Sun: Anwood Logistics System Co, Ltd

A chapter in Proceedings of the 2026 4th International Conference on Digital Economy and Management Science (CDEMS 2026), 2026, pp 341-354 from Springer

Abstract: Abstract This paper studies a low-carbon supply chain with a capital-constrained manufacturer and a retailer. Under a carbon cap, we examine how credit and product subsidies affect emission reduction and financing decisions. Four game models are constructed and solved using KKT conditions for green credit and advance payment financing. The impacts of carbon cap, subsidies, and consumer low-carbon preference on supply chain decisions are analyzed. The main findings are as follows. (1) Two emission constraint scenarios exist: stringent (mandatory) and lenient (achievable via internal decisions). (2) Consumer low-carbon preference and subsidy levels are key factors affecting the carbon cap and emission reduction. (3) Both subsidies positively affect supply chain decisions and social welfare, with stronger effects under advance payment financing. (4) Advance payment financing is always the manufacturer’s preferred strategy.

Keywords: Carbon cap policy; Capital constraint; Government subsidy; Carbon reduction (search for similar items in EconPapers)
Date: 2026
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Persistent link: https://EconPapers.repec.org/RePEc:spr:advbcp:978-94-6239-699-9_36

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DOI: 10.2991/978-94-6239-699-9_36

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