Under Stochastic Demand the Production Strategy for Two Products Considering Cap-and-Trade Regulation

Zhenyu Luo () and Changsong Ma ()
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Zhenyu Luo: Tian Fu College of Southwestern University of Finance and Economics
Changsong Ma: Tian Fu College of Southwestern University of Finance and Economics

A chapter in LISS 2014, 2015, pp 281-290 from Springer

Abstract: Abstract This paper considers a production model involving one manufacture who produces two similar products. One is “green” product, and the other product is “regular” product. In this paper, we formulate models to examine the impact of production for two products under cap and trade policy and study the effect of the green technology input. Analytical results are obtained: With cap and trade policy, the manufacture’s maximum quantity for product 1 and product 2 is not higher than the case without carbon emission constraint, and the expected profit of manufacturer under this situation depends on the initial allowance. Manufactures are required to apply some green technologies to produce “green” products. General economics concepts are achieved. That is, the green technology input could improve manufacture’s normal product quantities and expected profit in some degree.

Keywords: Cap and trade; Stochastic demand; Production strategy; Two products (search for similar items in EconPapers)
Date: 2015
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Persistent link: https://EconPapers.repec.org/RePEc:spr:sprchp:978-3-662-43871-8_43

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DOI: 10.1007/978-3-662-43871-8_43

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