A comparative study of carbon emission reduction modes in supply chain under carbon tax mechanism

The carbon emission abatement within supply chain is an important part of the realization of carbon emission reduction target. This paper first establishes a supply chain consisting of a manufacturer and a retailer and then proposes three modes of carbon abatement under carbon tax mechanism, namely carbon abatement by manufacturer alone (M-mode), by retailer alone (R-mode) and by manufacturer and retailer jointly (J-mode). Based on profit maximization, the Stackelberg game model is adopted to get the optimal decisions, and then, the optimization results under three modes are compared and the sensitivity analyses are carried out. The results show that the impacts of carbon tax on the manufacturer profit and retailer profit under three modes are complex and subject to the changes in the external environment. The carbon abatement level, the market demand, the profit of manufacturer and retailer are all the highest under J-mode, and hence, the J-mode is the optimal choice for the manufacturer and retailer. The management insight is that the firms and the government should increase the publicity of low-carbon products to improve the greenness of products, the market demand, profits and social welfare. The government should consider the external environment to set different levels of carbon tax according to different targets.