Cooperative emission reduction in the supply chain: the value of green marketing under different power structures

Under environmental policies and consumers’ green preferences, firms are facing the problem of how to improve the efficiency of emission reduction (ER) and increase profit. In this paper, we construct an analytical framework that includes a manufacturer and a retailer to explore the value of cooperative ER under the carbon cap-and-trade mechanism (CCTM). The manufacturer invests in green technologies to reduce emissions, and the retailer can choose whether to implement green marketing. We find that cooperative ER can increase the manufacturer’s ER level and the profit of the manufacturer and the retailer. In the retailer-led situation, the manufacturer’s ER level and the retailer’s marketing level are both higher than in the manufacturer-led situation. Moreover, the economic performance of the supply chain (SC) is better. Furthermore, when consumers have a strong green preference, the value of cooperative ER is greater; in addition, the advantage of the retailer-led situation is more obvious. Our work enriches the ER theory and provides guidance for firms to reduce emissions.