Optimal cap setting and pricing in supply chains under vertical-horizontal cooperation and cap-and-trade regulation

The main body of competition has changed from the competition between enterprises to the competition between supply chains. The cooperation of the chain-to-chain attracts large attention from entrepreneurs and scholars in an increasingly competitive environment. Thus, this paper studies a chain-to-chain system with price competition consisting of one manufacturer and one retailer in each supply chain under carbon cap-and-trade regulation. Considering vertical-horizontal cooperation, the six different models are established by introducing the structural cooperation and the contractual cooperation (adopting the wholesale price contract) of supply chains. Based on the Stackelbeg game and Nash game, the optimal solutions of six models are obtained. The results show that the decisions, profits, and social welfare of the supply chains are affected by the structural cooperation than the contractual cooperation. The asymmetric competition structure changes the bargaining power of the supply chains. The relationship of supply chains' pricing only is affected by the cooperation structures. The relationship of the cap setting, profits, and social welfare are affected by the cooperation structures and the main decision parameters.