Low carbon supply chain production and trading decision-making mechanism

The production and trading decision issue of a supply chain consisting of two emission-dependent manufacturers and one emission permit supplier is studied. By the establishment of the three agents' Stackelberg game model, their mutual reflecting Nash equilibrium solution can be obtained. On this basis, its functions are set as product carbon emission and government's 'cap-and-trade' regulation. The analysis results show that the impact of unit product's carbon emission and the government's 'cap-and-trade' regulation on three agents' optimal values and profits is inversed. Under the premise of controlling of product emissions strictly and setting emissions cap scientifically, two-level economic agents can increase their profits further by means of some contracts.