The synergistic effect of carbon trading and green credit on manufacturing enterprises' production decisions and sustainability performance

The paper explores the impact of carbon trading mechanisms and green credit on manufacturing enterprises in terms of green and innovative production. We discuss the situation under three production patterns by constructing a Stackelberg game model. The result shows that as the market becomes more sensitive to green innovation, the product pricing of manufacturing enterprises rises. When government regulators set high carbon trading prices and strict carbon allowances, this will force manufacturing companies to give up high-carbon emission production patterns. Participating in carbon emissions trading can enhance the profit level of manufacturing enterprises to a certain extent, especially when the carbon quota (carbon emissions trading price) is high. In the case of higher carbon trading prices and carbon allowances, the low-emission production pattern of participating in carbon emissions trading can enhance the overall welfare of society, which is beneficial to both manufacturing enterprises and commercial banks, and achieves Pareto optimisation. It is worth noting that when the carbon trading price and carbon limit are low, the good borrowing behaviour of enterprises can increase the total profit of the low-carbon production pattern, which shows that the interaction between carbon trading and green credit benefits from the good behaviour of enterprises.