Operational strategies in a low-carbon supply chain considering the impact of carbon credit

To cater to consumers' environmental awareness, some suppliers or original equipment manufacturers (OEMs) have initiated green technology innovation to reduce products' carbon emission levels. Simultaneously, some OEMs have launched personal carbon credit activities to attract sales. The impacts of different leaders reducing carbon emissions and OEMs providing carbon credits have been rarely discussed. This study considers a low -carbon supply chain consisting of one OEM and one supplier to explore the optimal operational strategies for when personal carbon credits are (not) offered and the supplier or OEM determines the carbon emission reduction level (CERL). First, we find that the CERL is higher without OEMs offering carbon credits. Specifically, the optimal CERL is higher if it is determined by the OEM when the OEM's sharing rate of the carbon emission cost is small; otherwise, a higher CERL can be achieved by the supplier setting the CERL. Second, both the supplier and OEM can maximize their profits if they decide on the CERL by themselves. When the supplier sets the CERL, offering carbon credits is more like a bargaining tool for the OEM. Finally, a greater carbon emission reduction can be achieved when the OEM does not offer carbon credits. However, the behavior of OEM providing carbon credits can benefit the environment when the product's original carbon emissions are relatively high, as lower total product emissions can be obtained under this scenario.