Optimal ordering and production decisions for remanufacturing firms with carbon options under demand uncertainty.

We study the role of carbon options in mitigating the risk of demand uncertainty for an emissions-dependent firm that conducts remanufacturing and then selling to consumers. Specifically, we first investigate the carbon option-void scenario as a benchmark where no carbon options are available under demand uncertainty in the emission trading market. Subsequently, the unidirectional carbon option scenario and the bidirectional carbon option scenario are introduced as alternatives to purchase carbon emission quotas. Through comparing the optimal ordering and production decisions under different scenarios, we demonstrate the positive role of carbon option contracts in improving the firm's profits and, more importantly, coping with demand uncertainty. Among other results, we observe that the bidirectional carbon option contracts perform better than the unidirectional carbon option contracts. Under the two option-based scenarios, the firm is more sensitive to the carbon option price than the exercised price. In addition, the firm has incentives to remanufacture with a relatively high remanufacturing rate and a loose carbon emission policy.

A novel multi-objective robust fuzzy stochastic programming model for sustainable agri-food supply chain: case study from an emerging economy.

On the one hand, supply chain management of agri-food products under uncertain conditions has a significant impact on food security and, on the other hand, increases the profits of supply chain components. Moreover, considering the sustainability concepts leads to more social and environmental benefits. The present study investigates the canned food supply chain under uncertain conditions and sustainability concepts by considering strategic and operational decisions and different characteristics. The proposed model is a multi-echelon, multi-period, multi-product, multi-objective location-inventory-routing problem (LIRP) in which the vehicle fleet is considered heterogeneously. The objectives of this model are to (1) minimize costs, (2) minimize customer dissatisfaction, (3) maximize production throughput, and (4) maximize job opportunities. In this study, carbon cap and trade mechanism are used to minimize environmental damage. Robust fuzzy stochastic programming (RFSP) is employed to cope and control uncertainties. The multi-objective optimization problem is implemented on a real case and solved using the Torabi and Hassini (TH) method. The results of this study showed that with increasing confidence levels, the severity of the problem increased and the values of the objective functions worsened. Also, using the relative value of stochastic solution (RVSS) criterion demonstrated that the effect of utilizing the RFSP approach on the first and second objective functions was higher than that the nominal approach showed itself. Finally, sensitivity analysis is performed on two parameters: the selling price of products to foreign customers and the cost of purchasing products from farms. The results of this study showed that changing these two parameters had a significant effect on the first and second objective functions.

Effects of China's low-carbon policy under stochastic shocks-a multi-agent DSGE model analysis.

China has announced a target of achieving carbon peaking by 2030 and carbon neutrality by 2060. Therefore, it is important to assess the economic impacts and emission reduction effects of China's low-carbon policies. In this paper, a multi-agent dynamic stochastic general equilibrium (DSGE) model is established. We analyze the effects of carbon tax and carbon cap-and-trade policies under both deterministic and stochastic conditions, as well as their ability to cope with stochastic shocks. We found that (1) from a deterministic perspective, these two policies have the same effect. Every 1% cut in CO2 emissions will bring a 0.12% output loss, a 0.5% drop in demand for fossil fuels, and a 0.05% rise in demand for renewable energy; (2) from a stochastic perspective, effects of these two policies are different. This is mainly because economic uncertainty does not change the cost of CO2 emissions under a carbon tax policy, but it does change the price of CO2 quotas and the emission reduction behaviors under a carbon cap-and-trade policy; (3) from an economic volatility perspective, both two policies can act as automatic stabilizers. Compared to a carbon tax, a cap-and-trade policy can better ease economic fluctuations. The results of this study provide implications for policy-making.

Cooperative emission reduction in the supply chain: the value of green marketing under different power structures.

Under environmental policies and consumers' green preferences, firms are facing the problem of how to improve the efficiency of emission reduction (ER) and increase profit. In this paper, we construct an analytical framework that includes a manufacturer and a retailer to explore the value of cooperative ER under the carbon cap-and-trade mechanism (CCTM). The manufacturer invests in green technologies to reduce emissions, and the retailer can choose whether to implement green marketing. We find that cooperative ER can increase the manufacturer's ER level and the profit of the manufacturer and the retailer. In the retailer-led situation, the manufacturer's ER level and the retailer's marketing level are both higher than in the manufacturer-led situation. Moreover, the economic performance of the supply chain (SC) is better. Furthermore, when consumers have a strong green preference, the value of cooperative ER is greater; in addition, the advantage of the retailer-led situation is more obvious. Our work enriches the ER theory and provides guidance for firms to reduce emissions.

Low-Carbon Transition Models of High Carbon Supply Chains under the Mixed Carbon Cap-and-Trade and Carbon Tax Policy in the Carbon Neutrality Era.

To achieve the goals of carbon peak and carbon neutrality, the low-carbon transformation (LCT) of high-carbon firms is inevitable. We construct game models of a supply chain with different dominant types under a mixed carbon policy that embraces carbon cap-and-trade and carbon tax. Solving each dominant model, we derive the effective area and optimal threshold of the mixed carbon policy to guide LCT. We find that the selling price, market demand, and profit of the supply chain system are equal in different dominant models due to the mixed carbon policy, but when a company dominates the supply chain, its profit is higher than when it is a subordinate. In addition, the high-carbon manufacturers (HCM) will pursue LCT only when the sum of the carbon tax rates and carbon trading prices is within a certain threshold, and the subordinate HCM are more likely to be driven to pursue LCT. Therefore, the government should adopt a differentiated hybrid carbon policy, setting a high (low) carbon tax rate for the HCM in a dominant (subordinate) position.

Carbon emission reduction cooperation of three-echelon supply chain under consumer environmental awareness and cap-and-trade regulation.

Considering that both the manufacturer's production process and the transporter's freight process produce carbon emissions, this paper constructed a three-echelon supply chain composed of a manufacturer, a transporter, and a retailer. This article studies the cooperative carbon emission reduction among the supply chain members under the carbon cap-and-trade policy and consumer environmental awareness. We used the Stackelberg game to explore four scenarios as follows: (1) in the non-cooperative decision model, no cooperation takes place among all supply chain members; (2) in the local cooperation decision of the manufacturer and the transporter alliance model, the manufacturer and the transporter work together to make decisions reducing carbon emissions, but each member of the supply chain makes its own pricing decisions; (3) in the local cooperation decision of the retailer-transporter alliance model, there is no cooperation except that the retailer and the transporter cooperate with each other to determine the selling price of the product; and (4) in the overall-cooperative decision model, there is complete cooperation among the members of the supply chain, who collectively decide on carbon emission reduction and the selling price of the product. Then, using the backward induction method, we derived and compared the equilibrium solutions and the profits of the supply chain system. The results showed that the scenario of complete cooperation among all supply chain members had the best performance in carbon emission reduction, market equilibrium quantity, and the supply chain system's profit, but the selling price of the product was likely to be higher than other scenarios. Two contracts have been proposed to coordinate the supply chain system. The cost-sharing contract is effective but imperfect under limited constraints. The two-part tariff contract can realize perfect coordination of the supply chain. Finally, we obtained several interesting conclusions from the numerical example and provide managerial insights and policy implications from the analytical results.

Manufacturers' product line strategies and environmental impacts under carbon cap and trade policies.

This paper explores the impact of carbon cap-and-trade policies and consumer low-carbon preferences on the choice of manufacturers' product lines. We further investigate the optimal decisions of manufacturers under different product line strategies. Moreover, we analyze consumer surplus, environmental impact, and social welfare under different product line strategies. The results show that producing low-carbon and ordinary products is the optimal product line strategy for manufacturers. In addition, we demonstrate that when considering carbon cap-and-trade policies and consumers' low-carbon preferences, the consumer surplus, environmental impact, and social welfare when manufacturers produce low-carbon products are always better than in other scenarios. Furthermore, our research results also show that with the increase of carbon trading prices, the consumer surplus and social welfare when manufacturers choose to produce low-carbon products are always better than in other scenarios. However, we find that the environmental impact is not always outperforming when manufacturers choose a product line that produces low-carbon products than other scenarios.

The Optimal Carbon Emission Reduction and Prices with Cap and Trade Mechanism and Competition.

More and more countries employ the Carbon Cap and Trade mechanism (CCT-mechanism) to stimulate the manufacturer to produce much more eco-friendly products. In this paper, we study how the CCT-mechanism affects competitive manufacturers' product design and pricing strategies. Assume that there are two competitive manufacturers; we give the optimal closed form solutions of the carbon emission reduction rates and retail prices in the Nash game model and the Stackelberg game model with CCT-mechanism, respectively. Additionally, we also discuss the impacts of CCT-mechanism, consumer environmental awareness (CEA), and the sensitivity of switchovers toward price on the optimal carbon emission reduction rates, retail prices, and manufacturers' profits. We find that (i) when the carbon quota is not enough, there is a trade off between investing in producing much greener product and purchasing carbon quota; when the carbon price is not high, the manufacturer tends to purchase the carbon quota; and when the carbon price is much higher, the manufacturer is more willing to increase the environmental quality of the product; (ii) manufacturer's size affects product's emission reduction rate and manufacturer's optimal profit; larger manufacturer tends to produce much greener product, but it does not mean that he could obtain much more money than the small manufacturer; and (iii) the decision sequence changes manufacturer's strategies; the optimal emission reduction rate in Nash and Stackelberg game models are almost the same, but the differences of prices and profits between Nash and Stackelberg model's are much bigger.