Coordination of an Environmentally Responsible Supply Chain with Cost Disturbance under Carbon Price Fluctuations

Abstract

This paper studies a two-echelon supply chain consisting of a retailer and a manufacturer under carbon emission reduction target and carbon cap-and-trade policy. The unit production cost varies when carbon price fluctuates. We find that carbon price fluctuations affect the original optimal production decision in the supply chain. We also compare how this disturbance affects the supply chain operations under three different power structures with a focus on the profitability and robustness.