Optimizing sustainability: a dual-channel supply chain model considering the carbon abatement cost subsidy and the low-carbon consumption subsidy

With the prevalence of low-carbon economic concepts and low-carbon lifestyles, government and enterprises around the world have taken measures to promote carbon abatement. The government encourages manufacturers to reduce carbon emissions by providing carbon abatement cost (CAC) subsidy, while also offering low-carbon consumption (LCC) subsidy to consumers to stimulate market demand and motivate manufacturers to furnish more low-carbon products. To figure out the effectiveness of each subsidy policy, this article constructs a dual-channel supply chain consisting of a single manufacturer and a single retailer. Among them, the manufacturer produces low-carbon products and sells them through both offline and online channels. The study considered four scenarios: no subsidy (the N model), only CAC subsidy (the C model), only LCC subsidy (the L model), and dual subsidy (the D model). The paper uses the Stackelberg game method to solve the equilibrium solutions of four models and compares subsidy policies from the perspectives of overall effectiveness and unit subsidy spending efficiency. The result shows that: (i) The carbon emission reductions, market demand, supply chain's profit, and consumer surplus of the dual subsidy policy are superior to those of the single subsidy policy, which in turn is superior to the no subsidy situation. In addition, under the same subsidy policy, the above indicators are better when the sales prices of offline and online channels are not consistent than when they are consistent. (ii) Compared to only CAC subsidy, the dual subsidy has lower efficiency in carbon emission reductions per unit subsidy, supply chain's profit per unit subsidy, and consumer surplus per unit subsidy. In addition, compared to only LCC subsidy, the dual subsidy results in more carbon emission reductions per unit subsidy, but supply chain's profit per unit subsidy and consumer surplus per unit subsidy show a phenomenon of first being higher and then lower. (iii) The unit subsidy spending efficiency of CAC subsidy decreases rapidly with the increase in the coefficient of CAC subsidy, while the unit subsidy spending efficiency of dual subsidy decreases rapidly with the increase in the coefficient of LCC subsidy. Finally, this study extracted management insights based on the above conclusions, providing reference for the government to formulate subsidy policies.