Open Access
ARTICLE
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:
Computers, Materials & Continua 2021, 66(1), 437-455. https://doi.org/10.32604/cmc.2020.012557
Received 04 July 2020; Accepted 26 July 2020; Issue published 30 October 2020
Abstract
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.
Keywords
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. https://doi.org/10.32604/cmc.2020.012557
Citations