Coordinated pricing analysis with the carbon tax scheme in a supply chain

Abstract

The carbon tax is a cost-efficient scheme to curb emissions, and it has been implemented in Australia, British Columbia, and other places worldwide. We aim to analyze its effect on dynamic pricing in a supply chain with multiple suppliers and one manufacturer. The profit-maximizing manufacturer makes final products using raw materials from suppliers with heterogeneous prices and emission rates. A two-stage game model is built over an infinite time horizon for this issue. In the first stage, suppliers face price-dependent demand to set their prices and production rates under the constraint of inventory capacity. Then, in response to the carbon tax scheme, the manufacturer evaluates the procur..