Emissions reduction and pricing of supply chain under cap-and-trade and subsidy mechanisms

• Published in: PloS one Vol. 17; no. 4; p. e0266413
• Main Authors: Miao, Wenqing, Zhu, Guohua, Shen, Bingliang, Kong, Demin
• Format: Journal Article
• Language: English
• Published: United States Public Library of Science 01.04.2022; Public Library of Science (PLoS)
• Subjects: Air quality management; Biology and Life Sciences; Carbon; Carbon emissions; Carbon offsets; Commerce; Comparative analysis; Consumers; Cooperation; Costs and Cost Analysis; Decision making; Ecology and Environmental Sciences; Economics; Emissions; Emissions credit trading; Emissions trading; Energy conservation; Financing, Government; Government; Government subsidies; Management; Methods; People and Places; Physical Sciences; Prices; Profits; Retail stores; Social Sciences; Subsidies; Supply chains; Trade regulation; China
• ISSN: 1932-6203; 1932-6203
• DOI: 10.1371/journal.pone.0266413

This paper explored how the government provides low-carbon subsidies for the manufacturers, retailers, and consumers in a secondary supply chain under cap-and-trade scheme. We calculated the best prices, emissions reductions, and the demands for common and low-carbon products when subsidizing each of the abovementioned market players. In particular, a comparative analysis of their equilibrium outcomes was made thereafter. The MATLAB simulation found that the optimal emissions reductions under the three subsidy modes were even and positively correlated to low-carbon subsidies, which, however, negatively correlated to the prices of both product types. Higher subsidies drove up demand for low-carbon products and dragged down that for common goods. But the prices of these products maintained the highest levels when consumers were subsidized; demand for common products was greater when subsidies went to retailers than to manufacturers or consumers, consequently generating the largest emissions and highest profits. When the subsidies were greater than [Formula: see text], all three subsidy modes saw a drop in total carbon emissions. That being so, the government should offer proper subsidies before seeing energy-saving progress.