Dataset Information

Incentive conflict and supply contracts under carbon cap policy.

ABSTRACT: Environmental regulations, once promulgated, can cause incentive conflict between manufacturers and suppliers. A manufacturer facing the regulation may undertake choices that can affect his sourcing decisions with the supplier. To analyze this, we develop a game-theoretic model considering a manufacturer who faces a per-unit carbon emissions cap and sources from a supplier. The manufacturer operates in a carbon sensitive market. We analyze the responses of the manufacturer and supplier and show that since the burden of carbon emissions cap is borne by the manufacturer, the first-best outcomes are not reached. Therefore, the supplier may offer different contracts to incentivize the manufacturer. We study two mechanisms: the two-part tariff and the revenue-and-investment sharing contracts. We show how such contracts achieve coordination and deliver efficient supply chain outcomes. Interestingly, we find that the contract preferences of the manufacturer and the supplier may not be the same and vary under different market conditions. Summarily, we highlight important considerations for the supply chain players in designing suitable incentives.

SUBMITTER: Kuiti MR

PROVIDER: S-EPMC9671477 | biostudies-literature | 2022

REPOSITORIES: biostudies-literature

ACCESS DATA

Publications

Incentive conflict and supply contracts under carbon cap policy.

Kuiti Mithu Rani MR Basu Preetam P Ghosh Debabrata D

PloS one 20221117 11

Environmental regulations, once promulgated, can cause incentive conflict between manufacturers and suppliers. A manufacturer facing the regulation may undertake choices that can affect his sourcing decisions with the supplier. To analyze this, we develop a game-theoretic model considering a manufacturer who faces a per-unit carbon emissions cap and sources from a supplier. The manufacturer operates in a carbon sensitive market. We analyze the responses of the manufacturer and supplier and show ...[more]

PMID: 36395325

Similar Datasets

Project description:In the context of environmental deterioration and people's growing environmental protection awareness, governments or regions have put forward corresponding carbon emission reduction policies. Among them, the carbon trading mechanism, as an effective means to promote enterprises to implement emission reduction measures, plays a crucial role in regulating enterprise behavior and promoting social sustainable development. Since various industries and sectors support each other in social and economic development, it is more reasonable to study the carbon emission reduction optimization decisions of society and enterprises from the perspective of the supply chain. To achieve the carbon reduction target of the supply chain system, manufacturing enterprises usually need to incur additional costs to invest in emission reduction technologies, and retail enterprises also need to conduct low-carbon publicity to increase product market share. On one hand, considering the impact of the government's emission reduction constraints and consumers' low-carbon preferences, manufacturers will take corporate social responsibility (CSR) into consideration to enhance product competitiveness. On the other hand, smaller retailers are more concerned about being treated fairly than about their own profits due to the extra cost of low-carbon advertising. In this paper, considering the background of carbon trading, the manufacturer's CSR and retailer's fairness concern behavior are introduced into the decision-making process of the low-carbon supply chain (LCSC), and the relevant emission reduction decision-making model is constructed by using Stackelberg game theory and backward derivation method. Through comparative analysis of relevant parameters, members' profits and utilities, this paper focuses on the influence of CSR and fairness concerns on system decision-making. The results show that the optimal way for LCSC decision-making is to cooperate with fair-concerned retailers and manufacturers with CSR. When manufacturers consider social responsibility within a certain range and retailers bear part of the cost of social responsibility as followers, it can not only effectively improve the emission reduction level of the supply chain and the profits of each entity, but also help to increase the enthusiasm of each entity for carbon emission reduction and the overall social welfare.

Project description:The purpose of this paper is to discuss how cross-border e-commerce enterprises can promote the sustainable development of the supply chain by optimizing the risk of supply disruption and product quality control mechanism of the cross-border supply chain of low-carbon agricultural products in the face of the problem of uneven quality and inventory shortage that prevails in the supply chain of low-carbon agricultural products under the framework of low-carbon economy. Methods: A two-level supply chain model consisting of a risk-averse cross-border e-commerce enterprise and two risk-neutral overseas suppliers is constructed to compare the optimal strategies and their coordination effects under the centralized and decentralized decision-making modes, and to deeply analyze the supply chain's operation mechanism. Further, the quality cost factor is introduced and an option contract model is designed to quantitatively analyze the impact of different decision-making scenarios and parameter changes on the overall supply chain performance. The results of the study show that under the coordination of option contract, the profit of cross-border e-commerce companies tends to decrease as the risk of supply disruption increases, while the profit of suppliers rises accordingly. Meanwhile, improving the quality of agricultural products can significantly improve the overall profitability of the supply chain. The cost-sharing mechanism is positively related to the profit of cross-border e-commerce companies, but negatively affects the profit of suppliers. In addition, the adjustment of the option price is directly associated with the increase of the specific supplier's profit and the decrease of the cross-border e-commerce enterprise's profit. Conclusion: By constructing and analyzing the option contract model considering the risk of supply disruption, this study effectively reveals the key influencing factors and their interactions in the cross-border supply chain of low-carbon agricultural products, and provides cross-border e-commerce enterprises with specific strategies to achieve coordination of the supply chain contract, improve product quality, and mitigate the risk of supply disruption, and then promote the sustainable development of the supply chain of low-carbon agricultural products.

Dataset Information

Incentive conflict and supply contracts under carbon cap policy.

Publications

Incentive conflict and supply contracts under carbon cap policy.

Similar Datasets

OmicsDI is part of the ELIXIR infrastructure

Tweets