Preprint Article Version 1 NOT YET PEER-REVIEWED

Decision and Coordination of Carbon Emissions Reduction Strategy in a Two-Echelon Supply Chain Considering Vertical Technology Spillovers

  1. School of Economics and Management, Shanghai Maritime University, Shanghai 201306, China
Version 1 : Received: 7 September 2016 / Approved: 8 September 2016 / Online: 8 September 2016 (11:39:40 CEST)

How to cite: XU, L.; WANG, C.; LI, H. Decision and Coordination of Carbon Emissions Reduction Strategy in a Two-Echelon Supply Chain Considering Vertical Technology Spillovers. Preprints 2016, 2016090030 (doi: 10.20944/preprints201609.0030.v1). XU, L.; WANG, C.; LI, H. Decision and Coordination of Carbon Emissions Reduction Strategy in a Two-Echelon Supply Chain Considering Vertical Technology Spillovers. Preprints 2016, 2016090030 (doi: 10.20944/preprints201609.0030.v1).

Abstract

We study a two-echelon supply chain made up of a supplier and a manufacturer, both of which can reduce their component/product carbon emissions. With the vertical technology spillovers, we explore the optimal decisions of centralized and decentralized supply chains with price dependent demand and propose coordination strategy for the decentralized supply chain. Considering the cost contraction effectiveness of the technology spillovers, the centralized and decentralized game theoretic models of a two-echelon supply chain are developed to investigate optimal decisions of pricing and carbon emissions reduction. Through a systematic comparison and numerical analysis, we show that the profits of both players and the entire supply chain improve with the effect of technology spillovers increasing. Carbon emissions reduction will be taken by various protective measures so that the supplier and the manufacturer who do not innovate can hardly share the results of innovating via the “free-riding” methods when the technology spillover is relatively small. We also propose a revenue-cost sharing contract through bargaining to enhance the performance of the decentralized supply chain.

Subject Areas

carbon emissions reduction; technology spillover; game theory; supply chain coordination

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