Research on Manufacturer's Channel Encroachment Strategy Considering Carbon Cap-and-Trade Regulation

JIANG Tanfei, SHI Chunlai, XIE Yongping, NIE Jiajia

Journal of Systems Science and Mathematical Sciences ›› 2024, Vol. 44 ›› Issue (4) : 879-895.

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Journal of Systems Science and Mathematical Sciences ›› 2024, Vol. 44 ›› Issue (4) : 879-895. DOI: 10.12341/jssms23248

Research on Manufacturer's Channel Encroachment Strategy Considering Carbon Cap-and-Trade Regulation

  • JIANG Tanfei1, SHI Chunlai1, XIE Yongping1, NIE Jiajia2
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Abstract

With the rapid development of the platform economy, more and more manufacturers sell the products through their own channels (i.e., the direct channel) besides the retailers (the indirect one), i.e., the dual-channel supply chain. Traditional wisdoms also refer to the dual-channel as the manufacturer encroachment, endowing manufacturers with absolute control over prices. Intuitively, one finds the manufacturer can have more carbon emission, which increases the manufacturer's purchase cost of carbon emissions (i.e., carbon cost) because of the increasing sales with channel competition, especially under the carbon cap-and-trade, namely channel competition effect. On the other hand, the research and development (R&D) cost per the unit product of the carbon reduction can be alleviated due to channel competition, which results in the lower unit carbon mission and wholesale price, namely, spillover effect. Motivated by the observations, we employ a Stackelberg game between a manufacturer (she) and a retailer (he) to explore the manufacturer's channel decisions under carbon cap-and-trade. It shows that the manufacturer always has an incentive to develop the direct channel. Counterintuitively, whether the manufacturer's carbon emissions in the dual-channel supply chain are higher than that in the single channel one depends on the manufacturer's reduction cost in carbon emission. To be specific, when the manufacturer's reduction cost in carbon emission is low, her carbon emission in the dual-channel supply chain is lower than that in the single channel; Otherwise, her carbon emission in the dual-channel supply chain is higher. For the retailer, he can benefit from the manufacturer encroachment. When the carbon price is high and the manufacturer's reduction cost in carbon emission is low, the retailer benefits from the manufacturer encroachment; Otherwise, his profit in the dual-channel supply chain is lower. In addition, we identify the region in which the retailer's profit is higher and the carbon emission is lower in the dual channel supply chain than those in the single one.

Key words

Cap-and-trade / channel competition effect / spillover effect / direct channel / carbon cost

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JIANG Tanfei , SHI Chunlai , XIE Yongping , NIE Jiajia. Research on Manufacturer's Channel Encroachment Strategy Considering Carbon Cap-and-Trade Regulation. Journal of System Science and Mathematical Science Chinese Series, 2024, 44(4): 879-895 https://doi.org/10.12341/jssms23248

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