Analytics of cap-and-trade policy for dual supply chain network structures
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ORIGINAL PAPER
Analytics of cap‑and‑trade policy for dual supply chain network structures Umangi Pathak1 · Ravi Kant2 · Ravi Shankar3 Received: 10 April 2020 / Accepted: 27 August 2020 © Springer-Verlag GmbH Germany, part of Springer Nature 2020
Abstract Nowadays, managing clean and green supply chain activities by reducing carbon footprint is a prominent aspect of the research. This study presents a dual supply chain (DSC) model under the cap-and-trade (CAT) emission reduction for the manufacturer-led five different DSC network structures, namely vertically integrated, decentralized, partially integrated retail, partially integrated direct, and horizontally integrated to minimize the carbon footprint. It uses a backward induction method to find optimum decision variables namely wholesale price, selling price, demand, and emission reduction rate. It presents a mathematical analysis to evaluate how the permitted emission quota and emission level of channel members affect the decision variables of various network structures. Further, it conducts a sensitivity analysis to measure how consumers’ channel preferences affect price and emission reduction rates. This study illustrates that (1) the emission reduction investment can increase demand and improve the emission reduction rate with a considerable drop in price. Also, (2) the additional purchased carbon quota can help maintain emission levels up to a certain extent only because any additional buying will be considered a short-term salutation. As a result, channel members are encouraged to invest in emission reduction technology instead of buying additional permits. These results conclude that promoting CAT can help achieve targets to reduce emissions and foster economic and social development. Graphic abstract This study focuses on two fundamentals. 1. Dual Channel Supply Chain 2. Cap-and-trade Policy
Measures
Dual Supply Chain
Cap-andTrade Policy
Ver cally integrated DSC 9(
Decentralized DSC
Impact of Government’s carbon permit quota and channel member’s emission level affects the decision variables
Analyse
Effect of consumer’s channel preference on selling price and emission reduction rate
Helps
To choose best fit network structure from VI-DSC, DC-DSC, PID-DSC, PIR-DSC, and HI-DSC
Par ally integrated retail DSC
Par ally integrated direct DSC
Horizontally integrated DSC
Extended author information available on the last page of the article
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Keywords Dual supply chain · Cap-and-trade policy · Carbon emission · Manufacturer-led dual supply chain · Supply chain network structures
Introduction The intensified amount of carbon emission in the environment causes severe physical, social, financial, and environmental damages. To maintain a better, clean and green living standard specific proactive steps for emission reduction initiatives such as climate change tax (CCT), climate change agreements (CCA), carbon price support (CPS) and cap-andtrade (CAT) have become essential for any company or any country for t
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