Emission Reduction Effort in a Low-Carbon Supply Chain: A Coordination Scheme

Abstract

Sustainability and low-carbon manufacturing have been under the scrutiny of the academics and practitioners, along with the governmental and non-governmental organizations. Not to mention the growing awareness and concern of the consumers about the carbon footprint, leading the researchers to the joint problem of sustainable supply chain coordination and emission abatement. This study contributes to the current literature by developing a contract for a dyadic supply chain model under a manufacturer-led Stackelberg game where emission abatement is a key decision. Implementing a green-sensitive consumer preference and carbon abatement level into the demand function, a revenue-sharing contract is conducted to solve the channel conflict and double marginalization effect. The analytical results and numerical example prove the profit improvement of both channel members and validate the effectiveness and environmental-friendliness of the constructed supply chain structure.

Keywords

• low-carbon supply chain
• carbon tax
• revenue sharing contract
• supply chain coordination