Comparisons of low carbon policies in supply chain coordination

This paper investigates the influence of low-carbon policies on channel coordination for a two-echelon supply chain consisting of one supplier and one retailer. Four different models are considered: the basic model, the carbon emission model, the carbon emission trading model and the carbon tax model. We find that the government policy on all carbon emission models is not universal among the firms as well as the customers. The carbon emission trading policy is always better than the carbon emission policy and the carbon tax policy when the allocated carbon emission quotas are greater than the carbon emissions. The carbon emission trading policy is proved to be an effective mechanism which can motivate the supply chain to reduce carbon emissions. Under certain conditions, the supply chain prefers the carbon emission trading policy with higher carbon price to other policies. In the framework of Stackelberg game with the supplier as the leader, for each carbon policy, the paper presents coordination mechanism with the all-unit wholesale quantity discount contract (AWQD). We analyze and compare the influence of low-carbon policies on channel coordination for the four low-carbon policies. Numerical experiments are conducted to examine our findings.