Non-cooperative game based carbon emission reduction for supply chain enterprises with a cap and trade mechanism

Abstract

With the increasing attention of society to the environmental issues, carbon emission rights have become a new type of resource with certain commercial value, which has changed the production function and cost structure of the original enterprises. In the course of operation, enterprises have increased the consideration of carbon emission rights from the original focus on “raw materials and products (services)”. Therefore, based on the carbon and trade mechanism, this paper deeply explores the decision-making of carbon emission reduction of the upstream and downstream enterprises in the supply chain and the choice of government carbon quota allocation scheme under the constraint of government carbon emissions, and uses game theory knowledge to analyze the effect of carbon emission reduction of upstream and downstream enterprises under the non-cooperative game. The results show that the emission reduction effect of the government’s carbon quota per unit of product allocation is more obvious than that of the direct total amount restriction, and it is beneficial for sustainability of supply chain systems.