Impact of Stakeholder Behavior on the Carbon Emission Reduction in Supply Chain

In a two-echelon supply chain consisting of a manufacturer and a retailer, the carbon emission reduction model is established for the scenario where manufacturer invests R&D for carbon emission reduction, retailer shares R&D cost, government implements carbon cap-and-trade policy, and consumers have a low-carbon-preference. This research compares the optimal profits, the total carbon emission reduction level (TCRL) in supply chain and product sales volume, and discusses the impact of stakeholder behavior on carbon emission reduction in supply chain. Introduction In the 21st century, a series of environmental problems have become increasingly prominent. To control the negative impact of economic activity on the climate and environment, governments around the world are exploring effective scientific policies, regulations and measures. Among them, the carbon cap-and-trade policy, as a market-based policy, has the most significant effect[1]. Many scholars have studied supply chain operation under a carbon cap-and-trade policy. Drake et al. (2016) investigated the influence of government behavior on supply chain operation problems where the firm makes the decision regarding the technology and production capacity. They found that, under the cap-and-trade policy, the expected profits of enterprise are greater, and the expected emissions of product are lower[2]. On this basis, Lin et al. (2018) studied production and technology choices under government emission regulation. They found that firms may produce more even though they do not use more green technology under a more stringent regulation (fewer allowances)[3]. Kartick et al. (2018) discussed the joint impact of manufacturer’s behavior and retailer’s behavior in two-period supply chain frameworks. They found that procurement decision of retailer is a key factor in green supply chain[4]. Chen et al. (2017) used a random auction experiment and a questionnaire to examine consumers behavior. They found that how consumers’ willingness to pay is influenced by carbon labels[5]. Going step further, Wang et al. (2016) focused on dyadic supply chain carbon emission reduction issues in an environment where consumers were assumed to be environmentally aware. They found that the cost-sharing contract can achieve the goal of reducing carbon emissions[6]. In the existing literature, the study of the carbon emission reduction decision in the supply chain often involves the behavior of two or three players. In reality, the enterprises in supply chain, as well as the external government and consumers, influence the carbon emission reduction decision. In this paper, we consider the behavior of four players at the same time, which makes the model more similar to the actual situation, and the conclusion is more valuable. Model Description, Assumptions and Notations The manufacturer sells products through an independent retailer in a ‘low-carbon’ sensitive market. The manufacturer is subjected to carbon cap-and-trade policy. The manufacturer should buy carbon allowances to offset the quota gap from the carbon market if their emission volume is larger than the allowance allocated by the government. In contrast, the manufacturer can sell its surplus quotas. In supply chain, any player can influence the total carbon emission reduction level (TCRL) of the supply chain by affecting the level of carbon emission reduction of the unit product and product quantity. The manufacturer’s low-carbon behavior is mainly reflected in investment in carbon R&D. The retailer’s low-carbon behavior is mainly reflected in a promise to the manufacturer to share a International Conference on Advanced Education, Management and Humanities (AEMH 2019) Copyright © 2019, the Authors. Published by Atlantis Press. This is an open access article under the CC BY-NC license (http://creativecommons.org/licenses/by-nc/4.0/). Advances in Social Science, Education and Humanities Research, volume 352