Manufacturers’ digital transformation under carbon cap-and-trade policy: investment strategy and environmental impact

Abstract

Abstract Digital transformation (DX) has become an important strategy for the sustainable development of traditional manufacturers. However, the impact of DX on the environment is still inconclusive, and whether it is beneficial for manufacturers to reduce total carbon emissions remains to be examined. Therefore, based on the carbon cap-and-trade policy, this paper employs a game-theoretic model to study the DX strategies of duopolistic manufacturers and to explore the influence of low-carbon policy on these strategies. Additionally, we compare the total carbon emissions before and after DX implementation by manufacturers, discussing the environmental implications of DX. And we innovatively segment the market into two scenarios: one with a low digital technology level and the other with a high digital technology level. Our research demonstrates that the appropriate DX strategy can not only boost manufacturers’ profits but also enhance their ability to withstand external shocks. In the scenario with a high level of digital technology, manufacturers can achieve greater profits and are more likely to reduce total carbon emissions, resulting in a win-win situation. Sensitivity analysis reveals that an increase in carbon trading prices encourages manufacturers to ramp up their investments, ultimately driving comprehensive DX. This study not only provides decision-making guidance for the DX of manufacturers, but also provides a direction for the government to promote DX and achieve carbon neutralization.