How do the carbon emission trading prices affect the financing decision of the supply chain considering carbon neutrality?

This paper considers a supply chain formed by a manufacturer with constrained capital and a retailer with sufficient capital. By using the Stackelberg game theory, we discuss the manufacturer's and retailer's optimization decisions for bank financing, zero-interest early payment financing, and in-house factoring financing under both normal and carbon neutrality scenarios. In the carbon neutrality scenario, numerical analysis shows that improving the efficiency of emission reduction drives manufacturers to switch from external to internal financing methods. The impact degree of green sensitivity on the supply chain's profit depends on the carbon emission trading prices. In the framework of green sensitivity of products and emission reduction efficiency, manufacturers' financing decisions are affected by carbon emission trading prices rather than by whether emissions exceed the standards or not. When the price is higher, internal financing is easier to obtain, whereas the space for external financing is constrained.

Automated summary

This paper uses the Stackelberg game theory to analyze the financing decisions of a manufacturer and a retailer in a supply chain. The results show that improving emission reduction efficiency leads to a shift from external to internal financing methods. The impact of green sensitivity on profit depends on carbon emission trading prices. Manufacturers' financing decisions are influenced by these prices rather than by emissions exceeding standards. Higher prices make internal financing easier to obtain while limiting external financing space.