Production strategy of carbon sensitive products under low-carbon policies

Abstract

This paper studies production strategy of a carbon sensitive products under the carbon tax and cap-trade policy. By introducing EOQ model and the demand function influenced by greenness preference, we draw following conclusions: first, the manufacturer's optimal production is positively related to greenness level of carbon sensitive product; second, Lower carbon tax and cap-trade will help increase carbon sensitive product production and promote the development of low-carbon economy; third, When the selling price of carbon emission rights is lower than the purchasing price, the cost of carbon sensitive product of higher greenness level is higher than the lower one. Studying the production strategy of carbon sensitive products not only help manufacturers develop more scientific production plans, but also alleviate climate warming, realizing sustainable development.