Open Access iconOpen Access



Financing Strategy of Low-Carbon Supply Chain with Capital Constraint under Cap-and-Trade Regulation

Changli Lu1, Ming Zhao1,2, Imran Khan3, Peerapong Uthansakul4,*

1 School of Economics and Management, Shanghai Maritime University, Shanghai, 201306, China
2 School of Economics and Management, Pingdingshan University, Pingdingshan, 467000, China
3 Department of Electrical Engineering, University of Engineering and Technology Peshawar, Peshawar, Pakistan
4 School of Telecommunication Engineering, Suranaree University of Technology, Nakhon Ratchasima, Thailand

* Corresponding Author: Peerapong Uthansakul. Email: email

Computers, Materials & Continua 2021, 66(1), 437-455.


Cap-and-trade regulation provides incentives for manufacturers to reduce carbon emissions, but manufacturers’ insufficient capital can disrupt the implementation of low-carbon emission reduction technologies. To alleviate capital constraints, manufacturers can adopt external financing for low-carbon emission reduction investments. This paper studies the independent financing and financing cooperation behavior in a supply chain in which the manufacturer and retailer first implement low-carbon emission reduction technologies and then organize production and sales in accordance with wholesale price contracts. Through comparing the optimal profits and low-carbon emission reduction levels under the independent financing and financing cooperation mode, we come to the following conclusions: (1) Although financing interest increases the cost of the supply chain, manufacturers prefer to invest in reducing carbon emissions rather than buying carbon quotas. (2) When financing independently, a decentralized decision-making mode (MD) is the best choice for manufacturers. (3) In cooperative financing, when the supply chain adopts a decentralized decision-making mode (SD) in which the retailer determines the financing cost-sharing ratio according to their optimal profit, the profits of the supply chain and its members are significantly improved. (4) When manufacturers and retailers adopt a centralized decision-making model (SC) in cooperative financing, they jointly determine the financing cost-sharing ratio and the level of low-carbon emission reduction. If the financing cost-sharing ratio meets a certain threshold range, the profits of manufacturers and retailers achieve Pareto improvement, indicating that this cooperative financing model is effective.


Cite This Article

C. Lu, M. Zhao, I. Khan and P. Uthansakul, "Financing strategy of low-carbon supply chain with capital constraint under cap-and-trade regulation," Computers, Materials & Continua, vol. 66, no.1, pp. 437–455, 2021.


cc This work is licensed under a Creative Commons Attribution 4.0 International License , which permits unrestricted use, distribution, and reproduction in any medium, provided the original work is properly cited.
  • 3062


  • 1682


  • 0


Share Link