Leasing or selling? Durable goods manufacturer marketing model selection under a mixed carbon trading-and-tax policy scenario

Abstract

Many carbon reduction policies have been implemented to reduce carbon dioxide in the manufacturing process of products. However, many products emit more carbon dioxide in the consumption process. From the consumer’s utility perspective, this paper firstly analyses the manufacturing and marketing model selection decisions of a monopoly manufacturer under the mixed carbon policy, and then a win-win result that can encourage the manufacturer to choose the marketing model with lower carbon emissions while at the same time obtaining the optimal profit is discussed. The results show that the production activity will proceed only when the carbon trading price is lower than a certain threshold. When the carbon trading price is lower than a certain threshold, leasing represents the manufacturer’s optimal marketing model. When the carbon trading price is higher than the threshold, selling represents the manufacturer’s optimal marketing model. For the carbon cap Q, there are equilibrium intervals in which the government can achieve the aim of controlling carbon emissions, while not overly affecting the manufacturer’s enthusiasm for production. For the carbon trading price and the carbon tax rate, there are two different intervals in which leasing gains more profit for the manufacturer while emitting lower carbon emissions.