Cooperation models in automotive supply chain under low-carbon emission reduction policies

Abstract

For the issue of carbon emission mitigation within the automotive supply chain, the cooperation between the vehicle manufacturers and the retailers has been proved to be an efficient measure to enhance emission reduction endeavors. This paper aims to evaluate the effectiveness of the cooperations between a vehicle manufacturer and multiple retailers based on the differential game method. By utilizing the Hamilton–Jacobi–Bellman equation, the equilibrium strategies of the participants under two different cooperation models, i.e., the decentralized model and the Stackelberg leader–follower cooperation model, are analyzed. To be specific, in the decentralized model, each participant independently decides its strategies, whereas the manufacturer cooperates with retailers by offering subsidies in the Stackelberg leader–follower model. Unlike previous studies that solely focused on participants’ decision-making in carbon emission reduction efforts, this paper also examines the retail pricing decisions of the retailers. Additionally, carbon trading is introduced to enhance the realism of our model. Through the theoretical analysis and the numerical experiments on the carbon emission reduction efforts of manufacturers and retailers, as well as the low-carbon reputation of vehicles and the overall system profit under both models, we conclude that the cooperative Stackelberg model outperforms the decentralized model in providing benefits to both parties. Furthermore, such a cooperative approach can foster the long-term development of the automotive supply chain, ultimately contributing to a more sustainable low-carbon future.