Abstract:

The impact of Carbon Caps and the risk aversion characteristics of system members on system optimal decisions for a supply chain consisting of a single manufacturer and a single retailer was studied. Numerical examples are used for verification. The results show that the dominant firm is more profitable under a cap-and-trade policy, but can harmonize the profits of supply chain members by adjusting the price of carbon trading. The risk aversion characteristics of system members is not conducive to the joint carbon reduction of manufacturers and retailers, and it has a negative effect on the utility of system members. Retailers' sharing of abatement costs can weaken the negative effects of manufacturers' risk aversion characteristics on their own utility, but increases the damage to their own utility. Joint emission reductions are better under centralized decision-making, while supply chain benefits are better under decentralized decision-making.

Key words: low carbon supply chain, carbon caps, risk aversion, joint emission reduction