Allocation of the Carbon Emission Abatement Target in Low Carbon Supply Chain Considering Power Structure

Abstract

The proposal of China’s dual carbon strategy is not only a kind of pressure but also an opportunity for enterprises. Both upstream and downstream enterprises in the supply chain pay more attention to carbon emission reduction, and consumers are gradually turning to a low-carbon preference. How carbon reduction targets are allocated among supply chain members with different technical efficiency and market opportunities will directly affect supply chain performance and social welfare. Power structure is an important factor that dominates the decision-making of the supply chain, so we establish the low-carbon supply chain model under three different power structures: manufacturer-led, retailer-led, and power pairs between two parties. We study the government distribution decisions of carbon emissions reduction targets under different supply chain power structures and discuss the influence of supply chain power structures on carbon emissions reduction distribution decisions and social welfare. The study found that if the carbon emissions reduction target increases, the government will adjust the allocation strategy to increase the proportion of enterprises whose emissions cuts have less impact on market demand. The study also found that the government will allocate more emissions reduction to enterprises with higher emissions reduction efficiency, and enterprises whose emissions reductions have a greater impact on market demand. When supply chain enterprises have equal power, the supply chain will have greater social welfare and market demand, but not necessarily greater supply chain profits.