Cooperative decisions of competitive supply chains considering carbon trading mechanism

Abstract Carbon emissions trading policy is a market mechanism which promotes global greenhouse gas emissions reduction and reduces global carbon dioxide emissions. The emissions reduction in the supply chain operation has become a hot issue in supply chain management. Thus, this paper studies the optimal cap setting and pricing in chain-to-chain system under carbon emissions trading mechanism. Based on the double decentralized scenario, the five different cooperation models are established by introducing the structural cooperation and the contractual cooperation (the wholesale price contract) of supply chains. The optimal solutions of these models are obtained through the Stackelberg game and Nash game. The results show that the bargaining power of the supply chains is changed by the asymmetric competition structure. Besides, the government should emphasize the influencing factors change of the cap in the process of setting carbon emissions cap.