Partial credit guarantee and trade credit in an emission-dependent supply chain with capital constraint

Abstract This study investigates a supply chain financing (SCF) system with one supplier and one emission-dependent and capital-constrained manufacturer. Unlike the traditional SCF, the manufacturer borrows two loans to execute the ordering decision and make a low-carbon investment, respectively. We derive the equilibrium strategies of the supply chain members under partial credit guarantee (PCG) and a combination of trade credit and PCG and compare with that under a benchmark (well-funded manufacturer). There exists a unique coefficient of credit guarantee for the supplier to decide whether to provide a trade credit. Numerical studies and extension are discussed to obtain more managerial implications.